The Human Side of Indicators

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The market gave it up on Tuesday.

After the NDX was up most of the day, the NDX went red.

AAPL which was extremely strong all day and led the market higher last week, died.

The market seemed to be waiting for the price action of the day.

The VIX which was never really down yesterday, despite the market being mostly flat, caught a nice bid back above 30.

Interestingly the VIX curve did not SNAP right back to backwardation.

The VIX stayed in a contango.

We are in an odd pattern where the VIX has been lagging not leading.

Thus looking at the traffic light, I might have to toggle back its reliance on the curve itself and watch VIX-SPX correlation more.

The VIX-SPX correlation was right on Tuesday, the curve was not.

That the Tuesday price action really goes on to prove is that when the S&P 500 moves 90 points, it almost never ends up being bullish.

Right now the VIX Traffic Light is Yellow

It could turn green, but I will be adding an extra level of personal scrutiny before I flip the switch.

Best part of 20 years of trading is I can make myself a factor in my systematic traffic light.

Your Only Option,

Mark

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