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Market Breadth Analysis
A spike in the VIX significantly above the 10 day moving average usually leads to at least an intermediate term bottom.
This chart shows the 20 day standard deviation of the VIX. When the VIX standard deviation falls to 1, it typically signals a top. Low volatility predicts high upcoming volatility and high volatility is typically associated with a falling market. When the standard deviation rises to over 3, it typically signals a bottom. Bottoms are hard to find with this indicator during market panics, however. In 2008, the standard deviation rose to over 12.
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