Watch the S&P 500's prior day low. If price breaks below it aggressively and the VIX hits or exceeds yesterday's high, the market is likely headed lower. That's your signal to trade bearish.
So now we're going to get into a particular setup that I look for on a daily basis. So on the previous day, the market made a low. Going forward, we're now looking at that subsequent day on the S and P. If price is coming down towards the previous day low, if you get a breakdown below that previous day's low, especially with aggression, what should happen is that the VIX should be at or above its previous day's high. This is the price action on the vix, Right? It makes a high. The previous day drops off and now the next day, when this is occurring, when the S and P is breaking down below previous day's lows, what bears want to see is that the VIX is at or above the previous day high. When S and P is breaching below the previous day low, what that implies is that there is enough pressure on the S and P that it is priced as it should be relative to the S and P. Okay. And what that implies is that there should be continuous movement below that previous day low on the S and P.
