We can examine volatility via the CBOE Volatility Index (VIX) and determine how to trade the S&P 500 (SPY) based on where both indices are at in present time. For instance, last Friday (as you can see in the chart below), the VIX was overbought and the S&P 500 was oversold. When that happens, we'll be looking for an entry point to buy the S&P 500. Today, we see the complete opposite happening; the S&P 500 is up and the VIX is down, so we may be looking at a pullback in S&P soon.
