Financial Stress – Low Low Low Low Low…

The following charts show an alignment between the dominant cycle in the VIX index (daily) and the dominant cycle in the St. Louis Financial Stress Index (weekly):

St. Louis Financial Stress Index Dominant Cycle

St. Louis Financial Stress Index Dominant Cycle

VIX and Financial Stress Index Dominant Cycle View

VIX and Financial Stress Index Dominant Cycle View

5 replies
  1. WTT says:

    I was asked how to trade this signal on a short-term basis. Here is a very basic way to trade it:
    Just go long the VIX ETF one day after the signal and exit one day after the cycle swing index gave a turn above the upper range. It is the basic strategy teached in Book 1 “Dynamic Cycles”. A very basic +10% profit trade in just one week with clear entry and exit signals:

    Trade Example

Trackbacks & Pingbacks

  1. […] The following case study exemplifies the importance of sentiment cycles and the predictive power of the WTT Dynamic Cycle Explorer (DCE). The Dynamic Cycle Explorer works on the assumption that cycles are not static over time. Dominant cycles morph over time because of the inherent nature of the parameters of length and phase. As real cyclic motions are not perfectly even, the period varies slightly from one cycle to the next because of changing physical environmental factors. This technique was used in the following market report that was published on 8 June 2014 in the publicly available WhenToTrade magazine internet section. (Link: Read original market update ahead of time.) […]

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