Can one rely on VIX to get direction of markets?
It is even more ambiguous then PCR. These are tools to understand markets undercurrent .. the hidden signals that mkt is generating..
In my view, they can't be used to decide the direction.
Look for yourself..
- download the VIX data from NSE site,
- download NIFTY data..
- draw both chart,
- keep them next to each other and see if VIX gives any clue about trend on regular basis.
VIX is useful as contrarian indicator.. i.e Low VIX mean more complecency in market..hence down trend can come at any time... But VIX can remain low for long time..and market keeps going up and up.
IMO, in real trading, you have to trade the price of stock / nifty future.. Farther u go from the price in calculation of some indicator and using that to take trading decision, more delayed you will be in the market.
Happy Trading