seine

Using 3 SD bollinger bands and VIX for buy signals

INDEX:SPX   S&P 500 Index
2210 18 43
SETUP:
This is a setup for identifying buy signals in the market, particularly for S&P 500             . The indicators we are using here are Bollinger Bands and the Volatility index, VIX             .
SETTINGS:
In the chart above, I have shown two bollinger bands with different settings - one with 2 Standard Deviations from the MA and the other with 3 Standard deviations away from the MA. To get the buy signal, we will use the outer bollinger bands , which is the 3 standard deviations BB.
THE SIGNAL:
The buy signal is trigger when the S&P 500 index             hits the lower band of the 3 SD             bollinger band and the VIX             peaks. For VIX             , there is no particular level it should cross, but a relatively high peak, compared to the previous mini-peaks, will be a good signal.

THIS IS ONLY FOR A BUY SIGNAL.

Very good. Now... when do you sell?
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You will use other indicators. VIX does not give sell signals. You can use put/call ratio, KST, MACD, or even when the index hits the upper 3 SD band. You can see that before the Oct 16 correction, the S&P 500 hit the 3SD upper band.
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Seine, can you tell me where you see the VIX going though, somewhat? Thanks man!
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Also I am a bit confused with your explanation, you will have a ton of followers if you call this right BUT you can also explain exactly what you re trying to point out, remember not everyone is a TA expert. :)
+1 Reply
seine Trance-Man
Sorry man, i will try my best to explain. I will redo the text below the chart.
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seine Trance-Man
Please see the explanation now. Let me know if that one makes more sense.
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No prob dude, but yah I might just be tired I think, not following exactly, prob me.. Where do you see, % wise, the S&P going price wise, and the VIX from here, are you expecting now a pullback in the S&P and a pop upwards on the VIX?
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seine Trance-Man
The purpose of this chart is not to tell where the market is headed now. It is just to show the setup that captures the big moves in the market.
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Hi, How do I get the VIX on the chart?

Thanks

Len
+1 Reply
seine lenbclark
Type VIX and look for CBOE volatility index. This is not in the indicator but on the chart section.
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Seine, your buy events line up almost perfectly with another scenario I've found. I have applied the following strategy successfully to SPY, QQQ, and IWM.
Setup: TSI 3,9,3 , Bollinger Bands overlaid on the TSI at 20,2 , MA 50 overlaid on the TSI, chart set to weekly.
Two buy events are indicated with this TSI setup.
Buy events: 1. The TSI moves outside of the lower BB, buy when the TSI upward through the lower BB. 2. The TSI moves below 0.00, buy when the TSI crosses 0.00 moving upward.
Sell: Sell when the TSI crosses its 50 period MA.
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seine BrandonMendez
Awesome. Thanks a lot for sharing. Can you put this on a chart and attach the link here? It's just nice to see everything on the chart.
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I'm new to TradingView and I don't think I can create the setup in TradingView. I have a screenshot of the setup in FreeStockCharts. How can I get it to you?
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seine BrandonMendez
Please send it to my email. seine.yumnam1@gmail.com
Thank you so much.
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Be mindful of hindsight bias - it is dangerous.
+1 Reply
seine timwest
thank you i will
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Welcome to the TradingView community! I just wanted to add that defining the peak of VIX is always a challenge and especially so if you use "close-only" charts. Either way, I hope you can post the specific signals as they happen so we can see one work in "real-time", without the hindsight bias. There are other signals in the chart that didn't work (were early at calling a bottom)
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nice work! do you have an update for this method for the last two sell-offs (aug 2015 and jan 2016?
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