Zeev's Turnips Patch-No Politics (ZEEV)

[Bearmove]

From Lawrence McMillan:

"... Volatility ($VIX) continues to decline as well, although it has
reached a plateau lately (Fig. 4). A declining $VIX is bullish. If $VIX stops
declining and begins to rise, then that is normally a sign that the
market is about to explode. In the last few years, such explosions have
been to the downside (i.e., a low on the volatility chart was a sell
signal). However, in the past -- durish bullish market phases -- a low
on the volatility chart often preceded a rise by the market. So, what
we can safely conclude is that, if a low in volatility appears, the market will generally become quite volatile soon thereafter. The direction of
its volatility is less certain.


In summary, then, we remain bullish in line with our technical
indicators. If the market begins to pull back now, we'd expect to see
sell signals from market breadth, but that alone would not turn us
bearish. However, if $VIX rises above 26 or the put-call ratios began
to rise, and if $OEX breaks down below its 20-day moving average,
then we'd have to abandon the bullish case."

Charts and more at link:
http://www.traders-talk.com/site/show_article.asp?id=906