at the 20 Level of the CBOE Volatility Index ,
which measures "fear" premium
in the pricing of Index Put/ Call Options traded
on the Chicago Board Options Exchange.
Elevated readings above 20, are usually associated
with above average levels of "fear" priced into the premium
of an option, a bet on the direction on the market,
making them more expensive to purchase
as insurance against a potential sharp market decline.
Elevated levels in the VIX above 20 continually,
in recent days and weeks for consecutive periods of time,
indicate constant "fear" priced into the market.
By pricing in fear like that, the sophisticated and very best traders in
are simply telling you that the market has the "brew" level of fear
priced in it, which will allow the market to DROP SHARPLY
WITH VERY LITTLE NOTICE, AND DO SO.....AT ANY TIME !
Thus, one needs be extremely cautious
about entering the market from the long side at this juncture,
or from" buying the dip" when stock prices are declining sharply like this
until such time that the VIX returns to levels below 20,
for a consistent period of time.
To get there, it sometimes requires
a very sharp CAPITULATION MOVE to the DOWNSIDE
in the marketplace, when all the available sellers cry "uncle" at the same time.
It is then, and sometimes ONLY THEN..
that a lasting meaningful bottom in price,.. can finally be found.