VIX 'Sell Signal' is Back

Online, September 23, 2010 (Newswire.com) - When the VIX (Chicago Board of Options Volatility Index) touches the low end of its trading range as measured by a technical tool called Bollinger Bands, some experts feel a sell-off in the market is likely to occur. In April of this year, noted financial advisor Dennis Tubbergen warned in his online blog that such an event had just occurred. Now Tubbergen is stating another such signal took place on September 3, 2010.

Tubbergen, who is CEO of USA Wealth Management, LLC, a federally-registered investment advisory company, frequently discusses the U.S. and world financial markets in his economic blog and his Moving Markets monthly newsletter.

According to Tubbergen, Bollinger Bands are a technical indicator where lines are plotted on a chart, two standard deviations from a moving average. One line is plotted above the moving average and another is plotted below the moving average. Since standard deviation measures volatility, the bands are wider during more volatile periods in the market and narrower during time frames that are less volatile.

"Whenever the VIX touches the lower Bollinger Band and rises back above it, a sell signal is typically generated," warns Tubbergen. "While no one indicator is accurate all the time, nor is it necessarily wise to make investment decisions based on a small number of indicators, technical analysts believe the study of past market trends leads to trading opportunities."

Does this mean a market decline is imminent?

"Not necessarily, but I believe the odds favor it given a few other indicators that are also flashing a 'sell signal,'" concludes Tubbergen. "I believe that, at a minimum, caution should be the order of the day."

For more information on Dennis Tubbergen's views, visit www.dennistubbergen.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Investing in securities involves a risk of principal loss. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.