Don’t Trust the 21 Week Cycle on the Volatility Index Chart

By | December 31, 2016

It’s only four data points but an interesting cycle of 21 week high periods has played out on the Volatility Index ($VIX) chart over the last 17 months. The pattern is highlighted with the blue cycle circles and I’ve placed Bollinger bands on the chart, that use a 21 period mean average with the bands set at three standard deviations. Each of the previous cycle highs touched the upper band, the most recent in early November this year.
The chart suggests calm in the first quarter of 2017 and then a sharp spike in volatility in early April, but, again, the data is limited and even if there was a larger set, I wouldn’t count on the cycle pattern playing out as predicted – because volatility is about unexpected change.

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