The VIX often spikes above its previous high before the S&P 500 and NASDAQ hit their lows, signaling rising demand for put options. Traders can use this early VIX breakout as a short-entry signal instead of waiting for stocks to break down. The strongest market moves happen when all three move together.
Sometimes what you'll see, S&P and the NASDAQ are not at previous day's lows yet, but the VIX is already above previous day high. In theory, you can argue that you're actually getting a better short entry because you're not necessarily waiting for that previous day low break. You're already getting information that the demand for puts is increasing where investors or institutions are expecting near-term turbulence. If folks are loading up on SPX puts, the demand demand increases at a very, very high caliber, this is the movement that you'll see where VIX will breach above previous day high well before the S&P and the NASDAQ do their parts. The best, most continuous moves occur when S&P, NASDAQ, and VIX move in tandem.
