Again, the concept is to look for signs of rotation to safety. As such, we look at rotation out of small cap (risky) stocks into large cap stocks via IWM/SPY; rotation from growth into dividend (SPY/PFM); rotation from stocks into treasuries (SPY/TLT); rotation from stocks into gold (SPY/GLD). The VIX chart measures investors purchasing puts for protection/hedging/speculation. The DOW percent chart is measuring stocks being able to maintain their uptrend, with the notion that the weak stocks will start to fall before the overall trend, as defined by large cap stocks follows.
- I define the short term as renko green boxes, vs red boxes. Again, renko looks at trend without the time component.
- I define the intermediate trend as prices coming off a new high, or not. For the DOW percent chart, I use the moving average being in , , or neutral territory.
- I define the long term trend as the slope of rising, or not.
- The VIX chart is inverse for these interpretations.