{"id":20667,"date":"2023-03-07T07:30:39","date_gmt":"2023-03-07T12:30:39","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=20667"},"modified":"2023-03-07T07:30:39","modified_gmt":"2023-03-07T12:30:39","slug":"how-we-can-use-the-vix-to-dodge-a-losing-trade","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/how-we-can-use-the-vix-to-dodge-a-losing-trade\/","title":{"rendered":"How We Can Use the VIX to Dodge a Losing Trade"},"content":{"rendered":"

Keep an eye on the exits…<\/p>\n

Whenever you’re trading a short-term position against a longer-term trend, you must know where the exit is.<\/p>\n

Otherwise, you can get trapped in a losing trade.<\/p>\n

Last Friday<\/a>, I made the case that even though the intermediate- and longer-term trends for the stock market are lower, the VIX buy signal would likely generate a short-term rally. <\/p>\n

So far, that rally is playing out. Friday’s 64-point gain in the S&P 500 set the index well on its way to our 4100 price target.<\/p>\n

But that rally in the stock market has also pushed the Volatility Index (VIX) down towards its lower Bollinger Band. <\/p>\n

In other words, the VIX is getting dangerously close to generating a broad stock market sell signal.<\/p>\n

Take a look at the chart…<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

VIX sell signals are generated when the index closes below its lower Bollinger Band (BB) and then closes back inside the bands (solid blue lines).<\/p>\n

We\u2019re not there yet…<\/p>\n

<\/p>\n

\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n

<\/p>\n

The VIX hasn’t closed below its lower BB. So, the earliest we could get a VIX sell signal is Thursday. The stock market can certainly work higher between now and then.<\/p>\n

But traders need to keep an eye on the exits. It was the action in the VIX that prompted us to bet on a short-term rally, so the VIX will also tell us when it’s time to head for the exits.<\/p>\n

If the current buy signal plays out like the three VIX buy signals last year (blue arrows), then the S&P 500 could make it up to 4100 – or even higher within the next few days.<\/p>\n

But that’s not guaranteed.<\/p>\n

If the VIX closes below its lower BB, then this rally could end abruptly.<\/p>\n

And with the intermediate- and longer-term trends still bearish, traders will be better off leaving the party a little early rather than sticking around too long.<\/p>\n

Best regards and good trading,<\/p>\n\n\n
\"signature\"<\/td>\n<\/tr>\n<\/table>\n

Jeff Clark<\/p>\n

<\/p>\n

Reader Mailbag<\/strong><\/h2>\n

What other technical indicators do you use to decipher sell signals?<\/p>\n

Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Whenever you\u2019re trading a short-term position against a longer-term trend, you must know where the exit is\u2026<\/p>\n","protected":false},"author":55,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-20667","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/20667","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=20667"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/20667\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=20667"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=20667"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=20667"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=20667"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=20667"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=20667"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=20667"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}