VIX 01 (Jun 09 - Oct 11)

[winston]

8 VIX Trading Myths Debunked

When it comes to the VIX, nothing trades quite like you think it should
September 8, 2010 | By Adam Warner

Don’t Believe All the So-Called VIX Experts

http://www.investorplace.com/options-tr ... unked.html

[winston]

Do You Know When to Buy and Sell Your Stocks? This Indicator Will Tell You...
by Karim Rahemtulla


After you've read this article, the next time someone asks you, "Hey, how's the market looking?" you'll know what to say - and sound smart saying it!

Not only that, the information I'm about to share with you will also give you a valuable clue as to when to buy and sell your stocks.

In their columns this week, my colleagues, Alexander Green and Marc Lichtenfeld, talked about the importance of tuning out the media "noise" and constant flow of bad news. Instead, they advised that you pay attention to real indicators like earnings (which are good) and investor sentiment (which is bad).

And that doesn't mean taking your cue from other investors and blindly following them. Quite the opposite, in fact. We continue to underline the importance of having contrarian instincts when it comes to investing.

But how can you tell what investors are feeling and the general mood of the market? Simple...

The Best Way to Gauge Investor Behavior

The CBOE Volatility Index (^VIX) is a measure of market sentiment, based on options trading among the S&P 500 companies.

In short, if more people are buying put options than call options, they're betting that the market will head lower. As a result, the VIX will rise, indicating fear in the marketplace.

Conversely, if more investors are buying calls than puts, they're predicting that the market will head higher and the VIX will fall amid perceived investor complacency.

As you can see below, the VIX and market volatility were trending higher a few weeks ago. But you can also see that the rise in volatility wasn't nearly as pronounced as it was in May after the infamous "flash crash."

More recently, the VIX hasn't confirmed the S&P 500's move from the 1,100 level down to the 1,040 level. And as it stands now, the VIX is about 40% lower than it was when it spiked to 37.58 on July 1.

Translation?

Are You Watching the "Head-and-Shoulders?"

Basically, there's an underlying bullish sentiment in the market. For evidence, the S&P 500 recently set what technical analysts call a "head-and-shoulders" pattern - a very bearish signal for the market. But the VIX didn't confirm this pattern and, lo and behold, the market rallied again.

Here's what to watch for next...

Interpreting the VIX: When to Buy and Sell Your Stocks

Right now, the VIX is trending lower. This is important because if it continues in that direction - and into the mid to upper teens - you'll want to buy the VIX. Why?

Because each time the VIX has traded in the mid teens, it's represented a major opportunity to short the market, since that level has historically proved to be the bottom of the volatility range.

And that range - if we ignore only the most extreme bullish and bearish events as aberrations - is between 13 and 49.

~ At 13: This means investors are very complacent. You should buy the VIX and sell stocks.

~ At 49-Plus: This means investors are panicking. You should sell the VIX and buy stocks.

Take the Market's Pulse Every Day

Now do yourself a favor...

If you're not tracking the VIX, do it. Just add the ticker symbol to your list. While there is no 100% accurate way of predicting what the market will do, it certainly pays to have indicators that can help you gauge investors' moods and the market climate.

The VIX is my favorite way of doing so and it's proved to be the most reliable indicator of the market's future moves over a short period of time.


Source: Investment U

[kennynah]

Do You Know When to Buy and Sell Your Stocks? This Indicator Will Tell You...
......
But how can you tell what investors are feeling and the general mood of the market? Simple...

The Best Way to Gauge Investor Behavior

The CBOE Volatility Index (^VIX) is a measure of market sentiment, based on options trading among the S&P 500 companies.

In short, if more people are buying put options than call options, they're betting that the market will head lower. As a result, the VIX will rise, indicating fear in the marketplace.

Conversely, if more investors are buying calls than puts, they're predicting that the market will head higher and the VIX will fall amid perceived investor complacency.

buying Calls does not increase VIX but buying Puts does?? sure or not.....

And that range - if we ignore only the most extreme bullish and bearish events as aberrations - is between 13 and 49.

~ At 13: This means investors are very complacent. You should buy the VIX and sell stocks.

~ At 49-Plus: This means investors are panicking. You should sell the VIX and buy stocks.


Source: Investment U

buy at VIX 49? clearly this author must be a novice.... she doesnt remember when VIX hit ~90 region not so long ago...

[winston]

Weekly Review

The VIX has fallen to the range it hit in August when the market peaked out and rotated back down in its trading range. There is some suggestion that the market may be peaking out on this move.

It does not mean it will immediately turn over, but there was weak momentum on the upside on SP500 this week, and we will be watching how much momentum there is early in the week.

In other words, whether the move completely runs out as the real post-summer session begins (typically the week after the Labor Day holiday week). VIX is at a level where it has led to a market correction within the trading range during the last four to five months.

We will see if we get that this week, and that is worth noting as we start a new week with the SP500 and the other indices showing a bit of weakness.

VIX: 21.99; -0.82
VXN: 22.98; -0.31
VXO: 20.89; -0.64


Source: MarketFN.com

[winston]

Weekly Review

VIX. For the past two weeks, the VIX has been holding at levels it hit back in August. What happened in August? SP500 was at the top of its trading range. Then fast forward a few weeks into late August. The VIX was down here as SP500 was at the top of the range.

Now fast forward to today. It is back at the levels from late July and early August that saw SP500 at a peak. We have volatility at that same level. Take another look at SP500.

Volatility is down and SP500 is up. SP500 is showing doji on the candlestick chart. That is an interesting development. Will it fall down? It is not necessarily the case.

It is not written in stone, but it is quite interesting and worth taking some downside positions on the SSO.

VIX: 22.01; +0.29
VXN: 22.26; +0.45
VXO: 20.7; -0.26


Source: MarketFN.com

[winston]

Volatility to Fall Driven by Liquidity By Phil McDonnell

The Fed is under tremendous pressure to keep the economic juggernaut rolling. The big political fear is a double dip recession on the eve of an election.

The volatility of the stock market falls when there is added liquidity, so it must fall in anticipation of QE2 being implemented.

The iPath S&P 500 VIX Short-Term Futures ETN (VXX_) is an excellent way to play the declining volatility. VXX is currently trading at $16.79. In a study of the relationship between VXX and the similar iPath S&P 500 VIX Mid-Term Futures ETN(VXZ_) completed yesterday, I found that the VXX declines an average of .39% in the next day after the ratio of VXX to VXZ rises above its 5-day moving average.

The result was based on 283 instances and is a statistically significant difference from zero, with a t-stat of 2.13. The ratio is currently above its moving average.

The difference between the two ETNs is, VXX is based on the one to two month VIX futures, while the VXZ is based on the four to seven month futures.

To play a declining VXX, I like the idea of a calendar spread strategy which will give us a direct play as well as time erosion going in our favor while we hold the trade.

http://www.thestreet.com/story/10871236 ... L_atb_html

[winston]

Weekly Review

VIX. Volatility sliced lower on the Friday gain. It did not slice through the recent lows; indeed, it is very much at the lows and key support areas carved out since mid-April.

There has been no major break by volatility. If this trends holds, then the market would sell and volatility would rally back up. That is what I was looking for this break to downside, gapping from the Thursday gap to the upside. That is a little island reversal.

It did not occur in the extreme, however, so it does not mean a lot. Volatility is still at this level, so it is still not a done deal that the market rallies from here. From a technical position, without considering the volatility, it certainly looks ready to move to the upside.

VIX: 21.71; -2.16
VXN: 22.72; -1.54
VXO: 20.39; -2.36

Source: MarketFN.com

[winston]

Weekly Review

Volatility is holding basically flat. SP500 has moved up to the 1151 resistance and has started to work laterally. As it has done that, volatility is working laterally as well. It tried to jump on Thursday as the SP500 rallied and then reversed.

That was a bit of a strange day, and volatility bumped higher on it. It was immediately back down on Friday. Recall that in August, when volatility hit this level, the market peaked.

We are at that level again. The market is stalling, but it has not indicated that it has peaked. Still looking for a breakout. It is important to note that volatility is hanging in there.

It is not showing a lot, although it is waving a caution flag because it is at the level where the market put in an interim high and rolled over at resistance back in August.

VIX: 22.5; -1.2
VXN: 23.98; -0.98
VXO: 21.05; -1.35

Source: MarketFN.com

[winston]

Breakout for VIX?

The VIX’s potential bullish wedge formation which began at end-May remains possible.

The index broke out of its resistance trend line yesterday and could be due for a major rally. This usually means technical weakness for the S&P500.

Source: CIMB

[winston]

Weekly Review

VIX. Volatility has broken below its lows from late spring 2010. As the market broke higher, volatility broke lower. It did not produce a selloff as it had in July and as we thought it might have done in September. Looked like it might do it, but no.

It is going to break down. This is not necessarily a bad thing. It likely just tells us that the correlation that set up during this period is now broken because the market is moving to a new range in itself.

Volatility can fall to very low levels for extended periods, and it does not mean that the market is going to start selling again. You have to watch for the correlations when they set up.

They did for awhile, but now it looks like that is not the case. The market the breaking higher, volatility is falling, and that is exactly what I would expect it to do.

VIX: 20.71; -0.85
VXN: 21.98; -1.08
VXO: 19.74; -0.86


Source: MarketFN.com