Just to br clear, a VIX buy signal is an equities sell signal as the two trade inversely. Thursday I saw what I thought might turn in to a VIX buy signal and posted it. This may be the strongest VIX buy signal in many years, the VIX hit 5 year lows this week, that is part of why this signal is strong.
Here's the chain of events that must unfold to see a VIX buy signal...
Just use standard 20/20 Bollinger Bands seen here in dark blue, the First thing is a close outside of the Bollinger bands, this is showing an extreme move in the VIX and the reason this signal is even stronger is because that extreme move outside the bands was also a 5 year low, pretty extreme. The second thing you need is a close back inside the bands. 3) You need a higher close then 2, something that also makes this signal stronger is that the VIX closed green on the same day the market closed green which makes for a stronger signal.
Today's option expiration day, there's usually a pin, so I'm not sure what to think about today, but any day in which a reversal starts, it's best to start with a gap up, all of the strongest reversal confirmations need a gap up to start, whether Dark Cloud Cover or a Bearish Engulfing Candle, they all need a gap up.
ES looks like it will be heading down in to the open, but it shouldn't threaten the gap up.
ES
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