Ring of Fire

[Keith K]

Thanks, and I have to agree with what Hulbert is saying. The VIX/VXN can't be used like other typical oscillating indicators, and I have never been able to use it as a contrarian indicator.

I view it as a way to gauge how "professionally" the market is behaving. Dropping volatility implies the market is acting "intelligently" and vice-versa. So, depending on where price stands, market "intelligence" is a guide to where price will travel next. "Smart" would say to expect a pullback around here. What should then follow is a chopping VXN as price quickly retracts, and then the "smart" money will begin buying back in.

That's my take on it anyway.