SPY & VIX _ How to find key support using 75% retracement

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Please refer to the other charts I have produced on this methodology.

It takes a long time to put these charts together and then to explain them for clarity for you.

Let's start from the beginning:
1. VIX             is a measure of volatility of S&P500             options. If volatility rises, buyers of options are driving up options prices aggressively relative to weaker sellers.
2. Almost all the time aggressive option buying occurs when stock prices are falling.
3. Once VIX             has risen 5 points, look for VIX             to fall by 75% of its recent low to high move. Once that happens, we can mark that level as KEY SUPPORT because that is where BUYERS came into the market to accumulate stock . It could also be where short sellers are buying to cover shorts.
4. What we want to see is SUPPORT to hold on any subsequent setbacks. You can scroll back to see other examples of this phenomenon and come to the realization that this is the process by which you can read market action and VIX             together to determine key support.
5. Notice what happened in November, then twice in December: BUYING WAVES didn't hold the market. So, we can assume these are Weak Buyers and from the looks of it, the market moved down and stopped these buyers out.

Keep a close eye on these KEY HIDDEN LEVELS and more using the analytical tools I have created here at TradingView.

All the best.

Tim West

9:33AM EST 1/11/2016 193.29 +1.37 last SPY            
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