If you are a trader, particularly trading ES, or spoos, you know how the intraday market often takes you out of a trade executed at the wrong time. You were expecting a short exchange and you were right, but you came too early. A common problem for all merchants. What if there was a way to tell if the market was moving in your favor before executing? We believe there is. And it mainly depends on reading both the trin and the vix. Consider this premise.

If there was an efficient way to tell if a trend has started on the trin, would it necessarily mean that the same trend has started on the vix? Not at all. Unless both the trin and the vix have ended an existing trend, trading against either of them could easily result in losses. We have developed a time-tested method for determining when a trend exists, as well as a means of determining targets for when it will end. And we have developed a comprehensive and consistently profitable strategy around it.

We are sharing our logic here for the first time anywhere.

When using a 1 minute graph, trin and vix move in small increments measured to the second decimal point (1/100). To illustrate the idea, we will only talk about the trin, although the basic idea applies to the vix as well. However, the first problem is determining which part of the bar you are looking at. We believe that the high of trin and vix corresponds to the low of the spoos. The opposite also is true. Also forget all the preconceptions about what is bullish or bearish. The trin can be at 3.4 and down to 1.9 and you can see a big rally in the process.

Assuming the trin has established a pivot in the opposite direction, if a trend is establishing, look for the following.

The trin should move from the current 1/10 decimal point to a new 1/10 decimal point. ei

current reading 1.15 and going up. To be trending, the trin must move at least 1.2X. Trin must not have been less than 1.15 when you start tracking it. Also, if the trin moves below 1.15, the uptrend has likely not started and you should keep watching. But once it starts moving, it will move to the next 1/10 decimal point and will probably continue at 1.3X or 1.4X or more. Therefore, the trend has started and trading with the trend will produce successful trades.

Another compelling factor, however, is the existence of gaps in trin and vix. We define a gap in this way. If the close of the previous minute bar does not intersect with any part of the current bar, there is a space. Equally important is that if the high of the current bar has not crossed the close of the previous bar, it has a gap that suggests that the index will move UP to fill the gap, resulting in a corresponding drop in spoos. When the space is filled If the low of the current bar does not intersect with the previous bar, the index will move down to fill the gap, resulting in a corresponding upward movement in spoos when the gap is filled. Gaps of any size in the trin are always filled. Gaps in vix less than .05 may not be filled. We have the data to prove it. So if you know where these gaps are, if the current reading is generally close to a known gap, holding the trade until the gap is filled can be hugely profitable.

We invite you to explore these concepts on your own or if you would like to see specific results please visit our website or write to us for examples of a particular historical date and we will provide you with the data.