Getting A Jump On Tomorrow’ Opening
One of the better ways to position yourself near the close for tomorrow’s opening is with the VIX. I have found that large intraday moves in the VIX tend to follow through into the next trading day and can be used to predict the market’s open.
Here’s how it works. If today’s VIX close is 1.75 points or more higher than its open, there is a downward bias for tomorrow’s stock market opening. If today’s VIX close is 1.75 or more lower than its open, there is an upward bias for tomorrow’s stock market opening. This signal’s edge over the past half decade has been correct nearly 60% of the time. Also, this edge increases slightly the higher the open-to-close difference is.
Near the close of each trading day, keep an eye on this differential. Along with your other indicators, it can help you determine an appropriate position overnight.