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Chapter 7. Volume Extremes, Volatility, ... > The Major Reversal Volatility Model

The Major Reversal Volatility Model

As we have seen, stock market volatility usually increases as market declines proceed along, ultimately reaching climactic levels as price breakdowns carry through to their ultimate conclusion.

Climactic levels of TRIN tend to develop at such times, so peak TRIN levels can be used as indirect measures of stock market volatility, with a likelihood of imminent reversals of market weakness. Maximum VIX readings, which suggest high levels of projected market volatility and perceived risk from option pricing, act as another indirect measure of such volatility.


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