The VXO has dropped very strongly over the last week and a half. On Thursday for the 2nd day in a row it closed more than 20% below its 10ma. Looking back to 1986 I was only able to find 3 other instances where this occurred. While it’s dangerous to draw solid conclusions from just 3 instances I decided to show them below:

It hasn’t happened in about 21 years, which makes the setup even more questionable, but the run-up / drawdown stats were so lopsided I thought it was worth pointing out. Over the next 2 days the instances all saw a drawdown between 2.1% – 3.8%. Only 1 instance saw any run-up, and it was just 1.6%. (We’ll be testing that at the open.)