Trading Epic Fury (Part 3)

Before moving on, I want to go back to the bottom screenshot in Part 2 and discuss the first arrow (Feb 5) with regard to the second bullet point here. Is that a time to do something?

I need to explain what I mean by “strong close.” I don’t have a quantitative (objective) definition and probably wouldn’t try to come up with one without rigorous backtesting [a whole other discussion]. I’m also not looking for “perfect,” which doesn’t exist. If the market starts acting wonky and this strong close indicator doesn’t trigger, then another of the six probably will.

Having said all that, my qualitative concept of the “strong close” indicator is something like:

• Wide-ranging bar.
• Close higher than the open.
• Close at candle high as a long upside wick suggests rejection of volatility.
• Close is substantially higher than anything in the past few weeks/months.
• Not a doji.

To assess whether Feb 5 is a positive trigger, I need to zoom out on VIX daily. The following chart goes back to Oct 2025:

All four annotated candles are closing highs over the recent past. The first arrow is wide-ranging and the strongest because it closes at session high [impactfulness is directly proportional to lookback period and although I’d have to scroll chart left to determine the period, here I just want to illustrate “wide-ranging”]. The second arrow is a higher close that has an upside wick and does not exceed the open of the large down candle following the first arrow: not a great exemplar for strength. The third arrow is a doji: not impressive despite being a 6-week high. A case could be made one candle earlier because while the tombstone is not wide-ranging, this is substantially higher than the previous month due to gapping up.

The fourth arrow—Feb 5—does not seem to be a “strong close.” It’s the highest close in over two months but only marginally higher than the third arrow. It is [probably] wide-ranging but has an upside wick. The qualitative criteria are really intended to specify a case that is clear-cut, blatant, indisputable, and decisive. Year-to-date volatility has trended up with higher highs but I haven’t seen a sudden, huge volatility explosion that might signify the storm is now upon us and buckle down the hatches!

I will continue next time.