How to use the FEAR and GREED indicator:

VIX as an indicator exists to assess whether or not the current market sentiment is bullish or bearish, all based on FEAR and GREED.

Developed by the Chicago Board Options Exchange in 1993 the CBOE Volatility Index (VIX) gauges the markets volatility.This index uses short term near the money call and put options and measures the implied volatility of the S&P500 index options over the coming month.

A level below 20 is bearish, meaning investors are more complacent. When VIX hits 30 or more it shows FEAR, which is actually bullish from a contrarian point of view.

VIX has contrary indicators within the calculation, we believe. As an example, we often see the market hit new lows during a low VIX.

This is simple indicator to add to your charting arsenal.Here’s how VIX looks on a point and figure chart, the core methodology we use for charting.