Is VIX pointing to a stock market crash in 2016?

The Next stock market crash prediction; do something different stop listening to the fools claiming to be experts 

next stock market crash prediction

Next stock market crash prediction; take it with a massive Jar of Salt 

Stock Market Crash 2017 or Stock Market Crash 2016 and so on; what’s the common theme. The theme is always the same; the world is going to end and chaos is going to reign supreme.  The story is the same, only the packaging changes. Had you listened to these guys, you would have lost a small fortune as they have been pushing the same story since the market bottom in 2009.  Focus on the opportunity factor and not the fear factor.

The VIX is one of the most commonly followed measures of fear in the Market and yet the majority tend to utilise the information they glean from this indicator in an incorrect manner.

One has to ask the following question. Why does the crowd always panic when the market starts to pull back? Why don’t they panic when the market is trading at lofty levels, and euphoric is running high? The answer has to do with something called the secret desire to lose syndrome.  You can discover more on this by heading over to our mass psychology section

While many will look at the chart below and prepare for the worst, we feel that they should be looking at the chart and preparing for the best.   One thing stands out very clearly, every time VIX has spiked upwards, the markets have almost always bottomed shortly after that. Extreme spikes have almost always correlated to selling climaxes in the market. What is a selling climax? A selling climax is when the masses panic and dump the baby out with the bathwater. In other words, they panic and sell everything as they think that the markets can and will only head lower; this is precisely when the markets reverse.  This is the perfect action at precisely the wrong time.

  Experts base next stock market crash prediction On VIX 

The five-year chart of the VIX below clearly illustrates that every extreme upward spike in the VIX was short lived and that shortly after the spike up, the VIX always pulled back and started to trend in the lower ranges for an extended period.

Experts base next stock market crash prediction on VIX readings

Next stock market crash prediction is not supported by VIX

Over the long run, the VIX has a tendency to trade in the 12-18 ranges, so do not listen to the fear mongers. Fear mongers are only good at selling rubbish.  When the masses panic you should be calm and vice versa.  Yes, it is hard to think straight when panic is in the air, but if you join the masses the outcome will be far from pleasant.

When fear governs a person’s actions, the outcome is nearly always unpleasant. When market volatility run high as is the case right now, it is best to tighten one’s stop.  Yes, it’s not the best feeling to be stopped out, but it is far easier to recoup from small losses than from major ones.  Another way to look at it is that if you are stopped out and you liked the stock, you have a good chance at getting in again at an even better price.

Do not panic as panic is for fools who have nothing better to do. Act like the big players who wait patiently for such opportune moments to load up on key stocks at significantly lower prices.  This is how they make fortunes because they view disaster as an opportunity.

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Updated May 2017

The next stock market crash prediction is the same as the one before; full of hot air and low on actionable advice. Put this simple strategy to play; panic when the masses are euphoric and celebrate when the masses are panicking.  The markets pulled back in 2016 and as expected they proved to be buying opportunities and until Fiat is eliminated every back breaking correction should be viewed through a bullish lens.

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