Vix stretches-strategy on buy signal for spy

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Vix stretches-strategy on buy signal for spyVIX Stretches Strategy On Buy Signal for SPY

Several VIX strategies were included in Short Term Trading Strategies That Work . One was called VIX Stretches and had two entry conditions:

SPDR SP 500 (NYSE: SPY ) is above its 200-day moving average (MA).

VIX has been at least 5% above its 10-day MA for 3 or more days.

When these conditions are met, SPY is a buy. The trade is closed when the 2-period RSI of SPY closes above 65.

The book noted that “the longer VIX stays above its 10-day MA and the more stretched it is above the average, the higher the likelihood the market is going to rally soon.” VIX has now been more than 10% above its 10-day MA for nine consecutive days.

The VIX Stretches Strategy was correct 84.85% of the time, an extraordinary win rate for a trading strategy with just two non-optimized buy setup conditions. SPY is now a buy under this strategy.

Now let’s look at the most overbought and oversold stocks (according to ConnorsRSI) heading into trading for Feb. 6, 2014. ConnorsRSI is a proprietary and quantified momentum oscillator developed by Connors Research that indicates the level to which a security is overbought (high values) or oversold (low values).

5 Stocks Due For a Bounce

GHL (Park City Group) is the most oversold stock with a ConnorsRSI reading of 1.19.

5 ETFs Due For a Bounce

ZIV (VelocityShares Daily Inverse VIX MT ETN) is the most oversold non-leveraged ETF with a ConnorsRSI reading of 9.18.

5 Leveraged ETFs Due For a Bounce

ZSL (ProShares UltraShort Silver) is the most oversold leveraged ETF with a ConnorsRSI reading of 10.89.

5 Stocks Due For a Pullback

For the third day in a row, OHRP (Ohr Pharmaceutical) is the most overbought stock with a ConnorsRSI reading of 98.86.

5 ETFs Due For a Pullback

JO (iPath DJ-UBS Coffee TR Sub-Idx ETN) is the most overbought ETF with a ConnorsRSI reading of 99.07.

TradingMarkets Lists provide users pre-populated lists of stocks and ETFs identifying symbols with overbought and oversold ConnorsRSI and Bollinger Bands ® readings. The Screener Lists are powered by The TradingMarkets Screener .

All data is as of the end of day on 2/5/2014.