ROC(7) on $VIX as an indicator of short-term market tops and bottoms

There's an interesting post by McClennan Financial Publications that describes the use of ROC(7) on the VIX to spot short-term tops and bottom in the stock market.

In summary, when the ROC(7) of $VIX crosses above zero, it suggests a market top, especially if the crossing comes after a sustained period under zero. Peaks of the ROC(7) above the 20% level, instead, indicate oversold  conditions and represent possible buying opportunities.

Let's have a look at the BUY signals first. I have marked seven peaks at or above 20% in the last year. Of these ones, signals 1, 3 and 5 were excellent.  Signals 2 and 4 were OK, and signal 6 was not good.  I would take this signal as a confirmation of other oversold market signals. There's a strange odd-even alternation of good and not-so-good signals, which may just be a coincidence.  We'll see how signal number 7 pans out in the next few weeks.

Now, let's look at the SELL signals, given by crosses above zero, especially after a prolonged time below zero. I counted 13 of such crosses in the last year. Of these, 6 were bad and 7 were good.  Slightly over 50% success rate is not great, but I see that most bad signals happened during the uptrend from September to February. Maybe this indicator works better in a sideways market.

This is what the $VIX ROC(7) looks like today.