A DOWNSIDE WARNING is in effect.
It was established Friday, when VIX exceeded 14.93 (25% above the 2-day low), and 16.53 (50% above August 9 low).

Since 1/1/2000, there have been 36 downside warnings. The subsequent high in the VIX is reached on an average of 12 trading days after the Warning, which in this case would be Sept 27th. The range has been from zero days (happened 3 times) to a max of 50 days (in 2007).

After the Warning, there is usually at least some upside retracement in the SPX before the VIX high is reached, but it is usually minimal and early. The average SPX rally high is only 1.9% above the Warning-day low, and happens on an average of 4 days after the warning. This would mean a high of 2168.24 reached this coming Thursday, before we collapse to new lows. Again, this is based on averages.

Additional signals that occur now will indicate worsening conditions, but also could signal a correction bottom. Monday’s next signals are 21.88 (25% above Friday’s close), and 22.04 (100% above Aug 9th low). After a warning there is a 86% chance at least one more signal will fire, and only an 8.3% chance that the Warning day is also the VIX high.

VIX low was 11.02 on Aug 9th; VIX high Friday was is 17.54. To cancel the Downside Warning, we must have one close below the 78.6% Fib retracement, which is 12.42. This level will change anytime the VIX hits a new intraday high.

Let me know if there are any questions! #VIXIndicator