I use the Summation Index (symbol: $NYSI) and the NYSE Bullish Percent Index ($BPNYA) as my two other confirmation tools in addition to the VIX-VXZ 5-15 ratio…NYSI is rising…I focus on the RSI line, which I find is a good signal for direction, and it’s now rising thru the Sweet Zone (50 to 70), which is usually bullish.
But again, the change in direction was so hard and fast late last week, that these indicators have yet to fully absorb the impact. On the other hand, as you say, one day does not confirm a change in direction….I’m not one to go all in short at this point…indeed, I believe the current sudden downtrend is only a cyclical move on the oscillators at this point in time, until proven otherwise. In other words, the Bears will have control for another several days…but possibly by late this week or sometime next week, the bulls may pull a massive short squeeze, if I’m reading the trend vs. cyclical correctly here?
It’s close to painting a green stripe! That is, it’s close to breaking the zero line and going positive…once again, it may well catch the Bears just as they are expecting the worse. By the way, some of the smartest people I have ever met were house painters.