9/28/03 UPDATE: Since May the Vix Index has been in a narrow channel that had a downward slope to it as you can see in the chart above. On a weekly basis the Vix has broken to the upside so we recommend you watch your individual positions carefully. Since our last update on May 18th the S&P 500 has advanced 5% not really doing all that much. However the Nasdaq has advanced and additional 16% after having risen 40% from  October 2002 through May 2003. We recommend watching 965 on a closing basis on the S&P 500. You can see the support on our SP500 Index Chart page. This support has held for 4 months now. 

5/18/03 UPDATE: On Friday the Vix Index reached  20. This is the type of extreme reading we watch for.  The market in general has trouble moving up after such low vix readings. Such low readings have been  a predictor of intermediate tops over the last couple of years. The index reveals complacency in the market. Bullish sentiment readings have been high recently also.  The Nasdaq is up about 40% from October 2002's low of 1108 so we recommend putting tight stops in on profitable positions.

4/15/03 UPDATE :  Over the course of the last 6 months the vix has traded between 26 and 41. We are currently testing the lower boundary. A vix close below 26 would break out the range. It would be a leading indicator that the Nasdaq is about to break through resistance at 1430. However, a close below 26 on the vix index is not an extreme. If it does, we would look next to a possible run down to the 18-20 area. That would be an extreme and likely a predictor of a market top. 

1/26/03 UPDATE : After retesting the 50 range in October 2002 which marked a great trading opportunity the VIX retreated to the 26 range and we are now back to 40.  Looking at the chart above, during the first half of 2000 and 2001 40 marked the approximate top so there is some resistance in this area. Though this is a relatively high fear reading it is not an extreme. If we go clearly through 40 I would be looking for an extreme is the mid 50's which would likely be once again a great trading opportunity. 

8/02/02 UPDATE : However in 1998 the VIX index hit the upper 50's in September, retreated to 30, then proceeded back up to 60 in October.  The VIX went over 50 for 7 days during a six week span before we hit bottom.
        So far in this summer selloff we have only been over 50 twice.  So it is entirely possible that it may get worse before it gets better.  However you look at it these recent readings make a intermediate term bottom very close at hand.