Trent Gardner’s article, “Using VIX to Forecast the S&P 500,” described a system to trade the SPY and DDM stock ETFs using the VIX. The formulas for the “VIX Timing System”, and the steps to enter them in MetaStock, are listed below. The formulas assume Reuters Datalink ticker symbols and online data. If you are using a different vendor, the first line of each formula will need to be changed to the symbol that data vendor uses.

To create the system test:

1. Select Tools > the Enhanced System Tester.
2. Click New
3. Enter the name.
4. Select the Buy Order tab and enter the following formula.

s1:= Security("Online:.VIX", C);
Ref(Sum(s1<Mov(s1,50,S), 11),-1) = 11

5. Select the Sell Order tab and enter the following formula.

s1:= Security("Online:.VIX", C);
Ref(Sum(s1>Mov(s1,50,S), 11),-1) = 11

6. Click OK to close the system editor.

If you wish to include short trades in the system, copy the Sell Order to the Sell Short tab and copy the Buy Order to the Buy to Cover tab.