Volatility Index shows that equity market is bottoming soon
It is easy to spot a bottom after an upturn is well underway. However it can be hard to predict a bottom when a market is still in the decline (such as now). An upturn is sometimes a false upturn, after which a decline resumes.
One of the indicators to track market bottom is to look at Volatility Index. Volatility Index is an indicator of fear. A very high volatility peaking of the index is an indication of market bottoming.
Currently Volatility Index is at 46, the last time when Volatility Index was trading around this level was at Oct 2008. After volatility index had peaked in Oct 2008, market had witness the rebound of the decade: S&P500 has rise from 788 (Oct 2002) to 1565 (Oct 2007).
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