EXPOSING THE VIX

http://tinyurl.com/4gc4d 10 yr chart
I recently read a piece on the VIX that says to watch it if it rises above 2002 downtrend line near 17. The falling VIX was BULLISH I agree NOT showing complacency to a point.
My disagreement comes on ASSUMING a RISING VIX will lead to lower prices, though it certainly might, as it did during the BEAR MKT.

http://tinyurl.com/5ng32 10 yr Dow. But the VIX STEADILY ROSE between the period of 1996 and 1998.....SAME TIME the DOW began a steep climb.
Only during 1998-1999 did a falling VIX correlate to a correction in DOW.
The VIX the FELL as the DOW made its current all time HIGHS in 2000 ! SO....how usefull is the VIX?

IMHO ONLY EXTREME readings ABOVE 40 have show to be useful tool......to show EXTREME BUYING OPPS! IMHO

http://tinyurl.com/5hqyx 10 yr SPX/VIX RATIO This RATIO IMHO is extremely helpful SMOOTHING out market action and volatility.
When a serious break up or down the 52 WK SMA occurs a SIGNAL is given, IMHO...early in 2003 (a buy) and early in 2000 (A sell)...we must be watching the TREND of the highs and lows to determine which one it is.

In CONCLUSION: A break of 75.46 would be first sign of REAL TROUBLE. A break of 55.01 PREVIOUS BULL LOW would clinch it IMHO.
ONLY a continued downtrend in the SPX and or persistant RISE in the VIX would accomplish this.
At that point anyone calling it a general correction would be dead wrong, IMHO. especially if 52 WK SMA begins to turn down!
Just my observations, certainly I am NO expert.


Duratek