VIXEK™ in Action in 2010

During the week of April 26, VIXEK™ gave a serious of bearish signals. In just 2 weeks, the market had lost over 8%.

On the positive side, on July 8, VIXEK™ indicated +5.0; a month later S&P 500 had gained 5.5%.

Again on September 2, VIXEK™ gave a bullish indication. A month later S&P was up over 5.5% & 2 months later was up over 12%!!

On November 3, (the day the Fed announced its QE2 plan) most of the market pundits explained the apparent “ho-hum” market response as “QE2 had already been priced into the market”. VIXEK™, on the other hand, saw something else and signaled an extremely bullish “+5”. Five weeks later, the L-S model fund guided by VIXEK™was up almost 7% since the QE2 announcement!

Other Notable VIXEK™ Moments

Between 10/19/07 and 11/7/07 VIXEK™ gave fairly strong bearish signal (-3 or lower) on multiple occasions. And we all know too well that the last major market downturn began in October 2007.

Throughout the following months, VIXEK™ continued to signal ongoing bearish moves, with very strong bearish signals (-5) delivered on three consecutive days in October 2008.

Beginning on 3/10/09 - just 3 days after the market bottom - VIXEK™ hit +5 on at least 5 occasions during the month of March 2009.


How is VIXEK™ Different?

There are about 300 "technical indicators" - some more popular than others. Many of them are sophisticated in design and are even based on common-sense logic.

Common to most of these indicators are the following characteristics:

1. Narrow focus

2. Require time to master

3. Go in & out of style

VIXEK™ lets you follow the net action of major market players instead trying to know or imitate their tedious methods.

Leave the indicators-mania to others; you just follow the wind!

How is VIXEK™ Used?

The easiest way to interpret VIXEK™ is to overlay the numerical indicator (between - 5 and +5) on a color bar.

Color Chart

From personal experience and extensive back-testing, we have learnt to get cautious around -2 and start getting bullish around 1.5 or so. (Remember, the "up" moves tend to be more sluggish which gets reflected in VIXEK™.)

VIXEK™ is a new and powerful tool that helps indicate likely market trend in the 3 to 6 week time-frame. It is best used for this macro read, alongwith with other tools that fit your personal investment style & experience.

How is VIXEK™ Not Used?

One, it is not used for making PowerBall picks! Seriously, it is not a "lucky random number generator".

Two, it does not work as a stock-picker.

Three, it is not used for day trading. It is not designed to predict the market in the short term. If there's such a predictor, this is not it.

Four, VIXEK™ does not factor in "events" like earnings, dividends, announcements etc. VIXEK™ doesn't "tell all" since it doesn't "know all".

Five, multiple readings of VIXEK™ are not "averaged out". The formula already accounts for recent scores.


VIXEK is a simple indicator with a nominal range of -5 to +5.

Behind its simplicity is a sophisticated, proprietary formula that takes 9 primary inputs during the trading day; goes through 17 different calculation steps, some of which have formulae that cannot be tweeted because they are longer than 140 characters.

The primary goal of VIXEK is to help active investors - individuals and small-funds - who may not have access to sophisticated tools, to look beneath the surface and know what might be happening in the market.

You may have noticed, on days the market closes up, most talking heads take a bullish stance and come up with a plausible explanation for why it went up. And when the market goes down the next day, they change their viewpoint promptly and deliver new explanations with equal confidence and certitude.

Weather VaneUsing data, VIXEK™ tries to read any significant reversals in "emotional kinetics" (bulls turning bearish; bears turning bullish) amongst major market movers. And since these players tend to move as a herd, their action usually creates a gust which gets reflected in VIXEK™ - our WeatherVane for Smart Investments.

Put another way, we place far more importance on the "walk" and actions of influential players and less on their "talk".

Elsewhere in the website, you can see the effect of VIXEKon two different portfolios - a hypothetical leveraged (+3X/-2X) long-short ETF fund, and a hypothetical, unleveraged (+1X/-1X) long-short ETF fund.

In one of the boxes to the right, we have also listed some noteworthy "VIXEK Moments"!