Written By Basilio Chen

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There is no better demonstration of the herd mentality and contrarian behavior shown than in the Volatility charts of the VIX.

Here is the VIX showing clear peaks and valleies corresponding to the top and bottoms of stocks.

And compare that to the S&P 500

Here is a simple confirmation signal:
Oversold at VIX > 40
OverBought < 16