Today I'm using a one-two punch for the VIX forecast.
The upper charts reflect the trend per the LR30 channel in conjunction with the Qs trend.
Technicals are now looking bullish for the VIX while the Qs ride the LR30 channel mean in the face of deteriorating technicals.
But what's at least as interesting is the behavior of the VIX PDQ Dashboard.
Using some of the pairs that were profiled originally in the VIX basket post, we can detect a pretty strong consensus from the Dashboard that VIX Long positions have not fared very well, with 4 of 4 Longs showing negative Momo . . . and these are not little numbers.
We're still fiddling with a more definitive Dashboard format, including a variety of programmable stops and risk management controls but, per our earlier posts, the basic model would have exited 3 of these positions once Momo reached 1.5 % while XLE would never have triggered a Long due to the BF status.
Notice that current z-scores of the 4 (hypothetically) long positions are all only 50% of the way to the band reversal values, suggesting more of the same to come.
Also keep in mind the previous caution that the VIX is a statistical value, while the pair ETFs reflect actual prices so you can't actually make these trades other than as options and the VIX values shown are not option prices, so the plot gets even thicker.
Our premise in using the VIX basket is not to execute these trades . . you can't . . but to use the power of the VIX/pair Z-scores to forecast market momentum.
At the present time the VIX Dashboard is showing exceptional alignment.