|2015.01.09 VIX Cycle Model Chart|
The VIX cycle model, while it does not capture short-term spikes in VIX seems to have predicted a smoothed rise in VIX beginning in the third quarter of 2014. The Z-score approaching +2 sigma suggests continued pressure for rising values through 2015. It may be a coincidence, but the VIX curve now parallels the silver price pseudocycles which also emerged for 2015. A previous iteration of the model is shown below and here on the blog. I would also note that comparing and contrasting the two charts, one can see that timing of longer-term directional change is better predicted than price magnitude.
|2014.09.12 VIX Cycle Model Chart|