Way back on August 30, I did a post called Past Fear, Present Fear, which offered up an analog of the VIX. I daresay it was one of my best posts of 2014 and things certainly unfolded as I hoped they would -- although today was no fun. I followed up on October 9 with my Moment of Truth post, which was just before the markets started falling hard. So far, so good.
I’ve hacked together an update of the analog (although with different colors). Below we see in yellow the “throw-under” low, followed by the green burst, the cyan mega-burst and -- where we are today -- the magenta decline. Historically, this was followed (in grey) by another push higher.
Below is the present VIX, which is panning out similarly, except in a sped-up fashion (e.g. fewer bars). The big question, of course, is how long we stay in “magenta mode” (where the markets get complacent again and grind slowly higher) before we return to another surge in the VIX. It goes without saying that I’ll be waiting for the grey rather impatiently.