Using The VIX
The VIX (the Chicago Board Options Exchange Volatility Index) is used as a
contrary indicator. The higher its reading (and hence the more fear in the
market), the more likely the market is reaching a short-term bottom, and the
lower the reading, the more likely the market is reaching a short-term top.
—Larry Connors, from
Connors on Advanced Trading Strategies (1998, M.
Gordon Publishing Group, Malibu, Calif.).