This paper presents a simple kinematic model of the so‐called ‘‘very high state’’ of black hole candidates, during which several QPO observations have been made. The model is based upon the viscous and thermal instabilities that are believed to be present in accretion disks. In this model, the very high state is a transition phase between the high (thermal, quiescent) state and low (power law, highly variable) state that is characterized by a quasi‐stable disk oscillating on the local instability timescales. The disk can be stablized by a hot wind that could feed a Compton cloud, which in turn could produce the hard tail in the observed x‐ray spectra. The model is able to reproduce both the overall shape and the amplitude of the power spectral density and the observed frequency dependent lags between the hard and soft x‐rays. In addition, the required energetics of the hot wind is shown to be consistent with the energy required to feed the hypothesized Compton cloud. Specific comparisons between the model and data taken during the very high state of GX339‐4 are made. ©1994 American Institute of Physics.