Yesterday's VIX Divergence Called a Four Year Bull Market 20 Years Ago


The VIX Divergence yesterday, called the beginning of a four year bull market from 2003 - 2007.


By nature, the VIX has an inverse relationship with the stock indexes and the VIX Divergence we saw yesterday hasn't occurred since 2003. It happened twice during 2003 during a time period when the market continued to move higher while the fundamentals were bearish.


As of yesterday, November 3, 2022, the S&P futures posted lower lows 3 days in a row while the VIX also posted lower lows 3 days in a row. On an intra-day chart, at the end of the day yesterday, the stock indexes and the VIX accelerated to the downside. Since there is an inverse relationship between stock indexes and the VIX this was highly unusual and seemed to be a capitulation point for this divergence.


I would never suggest using one piece of data with a sample size of two to make a trading or investment decision. Very rare events that call turning points can be noteworthy and add to your existing set of trading tools.


Additionally, the signal in January 2003 took about two months to really start working.


We go over the Tradestation workspace setup as well as the Easylanguage code for this setup.

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