VIX 01 (Jun 09 - Oct 11)

[winston]

Weekly Review

VIX. The VIX is one area that has not been making much sense if you suspect that selling leads to an increase in volatility. For the past six weeks, SP500 has made a tremendous run lower (relative to the move higher). It sold sharply and especially hard the past two weeks.

When the selling started, the VIX did pop off the top of its trading range, but that was it. It just moved laterally until Friday when it did bounce up and tap the 200 day EMA at the top of its range. Will it make a breakout now? It likely would if the market continued to sell, but the fact that volatility is not moving anywhere just means that investors are ensuring the downside for very little.

They do not think there will be that much downside. That can be a problem because it can be a contrary indication. If everyone thinks the market will hold and bounce, that is typically when something else happens, such as the bottom falling out.

The VIX is pretty good at showing relationships and does not look like it wants to break higher. That would suggest that the market is going bounce. That is something I talked about last week. It just has not done it yet, but I will be watching because we are approaching a new support level that could bounce the market to the upside. The volatility is suggesting that there will be a rebound.

It suggests that because it is holding its range despite the sharp selloff in SP500 and the other indices. They have not held their range, yet volatility has held its range. As the indices approach support early this week, that tells me they can put in a very tradeable bounce to the upside. Again, it would just be a bounce until proven otherwise.

VIX: 18.86; +1.09
VXN: 19.85; +0.97
VXO: 19.3; +1.32

Source: Investment House

[winston]

Weekly Review

VIX. As the market finally broke lower, volatility broke out. It is interesting to note that the stock indices did not break below their lows, but they did break out of their ranges.

As they broke out, obviously the VIX broke out as well. Now they are at their support levels. The VIX has rallied up to some prior levels. First is the mid-February peak, and then the gap up point in March. There is an island reversal, a gap up, and a gap down.

Very important level. It has experienced a bit of resistance. Whether the stock market decides to rally at this point determines whether the VIX falls back down.

VIX: 21.85; -0.88
VXN: 23.58; -0.89
VXO: 21.44; -0.53


Source: Investment House

[winston]

Weekly Review

Volatility was up 1.81 on the VIX to 21.10. That bounced the VIX off of the 200 day EMA.

On Tuesday and Wednesday it sold back down to the 50 day EMA, but each day it reversed off of that level.

After breaking higher and looking as if it would roll back over, the VIX has found support and it will try to rally. That could mean there is more selling ahead. We will see. I think there is more selling ahead.

It is just whether it occurs Monday, Tuesday and/or Wednesday or if it holds off, lets the market try a bounce and pushes it back down to the 50 day EMA level again.

Then it sells off and we have a spike higher to a more meaningful level that could indicate a reversal.


Source: Investment House

VIX: 21.1; +1.81
VXN: 22.58; +1.82
VXO: 21.59; +2.19


Source: Investment House

[winston]

Weekly Review

VIX. Volatility fell like a stone as the market rallied like a rocket on this relief bounce. Volatility is holding exactly where it held in December, January, February, April, May, and June.

Look as the doji it is showing. That suggests there could be a selloff. They have been playing together in lockstep with just one aberration. They have been bouncing back and forth together.

The breakout was interesting because the stocks broke out to the downside, and then they have reversed. There was a breakout and reversal, and now there is a hold as support and maybe a rebound here. Very important to watch.

Could be indicating that the relief rally is over. It is just an indication; volatility is not set in stone. Obviously not, because we had a breakout from this range back in June. Nonetheless, it bears watching given that the indices are at important levels in the market overall.

VIX: 15.87; -0.65
VXN: 17.37; -0.49
VXO: 15.22; -0.06

Source: Investment House

[winston]

Weekly Review

VIX. The VIX gapped higher, but it closed virtually flat when the market recovered.

Volatility is simply not exploding higher, and it shows that this selling was not that virulent. That is, of course, a good thing for the upside.

VIX: 15.95; 0
VXN: 17.45; -0.26
VXO: 15.65; +0.16


Source: Investment House

[winston]

Weekly Review

The VIX moved sharply to the upside last week as the market sold back off the top of its trading range. It has been moving lockstep with the market.

In early July SP500 bumped the top of its range and then sold off. Volatility recovered as it sold off. They are trading pretty much in lockstep.

Now volatility was trading way off its high on Thursday and Friday, and it is doing so near the prior peaks and this gap up point from March.

We could be seeing volatility top out. If it does that, that means a selloff would lead to a bounce in equities. We will have to see how that plays out. Something to watch. They have been trading in step, so it may give us an indication that it is ready to rebound


Source: Investment House

[winston]

Weekly Review

VIX. Volatility is on the downswing given that the indices have been moving higher. That makes a lot of sense. It is trading in a range as have stocks. Stocks have been trading in a range and volatility is matching. We had a peak a week ago, and that is when the market bottomed at that 50 day EMA on NASDAQ and the SP500 and bounced.

Now it is heading lower, but it has not hit the bottom of the range yet. That tells me there is still more upside to this move as long as nothing extraneous comes along to dump the apple cart over. Like, say, a total breakdown in government.

In any event, it looks like volatility is saying we still have a move higher up into the ranges with respect to SP500 and NASDAQ. They could move up and bump the top of the range then maybe stall out. Again, they have the potential to make a breakout.

Volatility is not necessarily telling us that because it is proceeding down. When it gets to the lows, you can bet the indices will be at the highs of the rally. Unless there is something to break it out like a budget deal or really good news, then it will likely turn back down and trade lower in the range once more.

Source: Investment House

[winston]

Weekly Review

VIX. There was a breakout to the upside surpassing the June peak. It is right in the midst of that big, March surge to the upside. But note the doji; it is a gap to the upside, a selloff, and then a recovery.

Still a positive move, but it went nowhere after the gap. The sellers took their shot. The buyers then recovered and bounced it back up. You could say buyers, but it is also the fear index that bounced it back up as well.

This could very well be the peak of this move. The overall stock indices have traded down to support and bounced. Maybe they want to go down to the bottom of the range.

Maybe SP500 will break the 200 day EMA and go down to those March and June lows. If so, volatility moves higher up toward the March levels. My point is that if the market feels QE3 will come, it will not sell out of the range. If that is the thesis we are following, then it should not sell out of the bottom of the range, pure and simple.

The market will do what it wants. We will not stop it from doing that, but we are anticipating what may happen so we can be ready to act whether we are right or wrong. You have to be aware of the possibilities and set yourself up to take advantage of them.

I always say we react and follow the market, but you have to follow it in time to make money. You cannot chase the bus. You have to figure out what can happen and what you believe will happen, and then be ready for any scenario.

This can very well mean that the market has hit its peak. Again, based upon the pattern and our thesis, there will be QE3.

Source: Investment House

[winston]

Hmmm.... the "experts" are asking u to buy, so it's probably time to sell

The Best Time to Buy Stocks in Five Months By Jeff Clark
Tuesday, August 2, 2011

The sky is falling. America, as we know it, is crashing. Thoughts of Armageddon are now mainstream. The world is ending.

So let's buy stocks.

Huh?

Of course it sounds crazy. Who in their right mind buys stocks in this environment? Actually, if you want to make money, you have to buy stocks here.

Take a look at this chart of the Volatility Index (the "VIX")…

The VIX is the stock market's fear gauge. A falling VIX indicates investor complacency. A rising VIX shows fear.

As you can see from the recent sharp spike in the chart, investors are scared. They're so scared, in fact, the Volatility Index spiked above its upper Bollinger Band (the blue lines on the chart) last week.

Bollinger Bands measure volatility. They indicate the most probable trading range for a stock or index. Whenever a chart trades outside its Bollinger Bands, it indicates an extreme move – a move vulnerable to a sudden and sharp reversal.

Last week, the VIX closed above its upper Bollinger Band – indicating an extreme move in investor fear. Of course, we all know the best time to buy stocks is when investors are scared – when they're so frightened of potential losses, they're willing to dump positions at "fire sale" prices.

We've seen this movie plenty of times before – twice already this year, in fact – and the ending doesn't change.

Take another look at the VIX chart. Notice the spikes in fear that occurred in mid-March and again in mid-June. Each time, the VIX spiked above its upper Bollinger Band. When it fell back inside the Band, the VIX triggered a "buy signal" for the broad stock market. In both cases, the S&P 500 rallied about 75 points in just a couple weeks.

The VIX closed above its upper Bollinger Band last week. It fell back inside the Bands yesterday. While there's no guarantee history will repeat and we'll see another strong, short-term rally, I like our odds.

Today is the best time to buy stocks since March. So I'm buying stocks here… You should consider doing the same.


Source: Growth Stock Wire

[winston]

Weekly Review

VIX. The VIX blew out to the top on Thursday and Friday. It easily surpassed the March peak. I have said that once it revved up, it would easily be able to surpass that level (indeed, to reach prior levels). It reached 39.25 on the high Friday. If we scroll back over to the 2010 selloff, intraday it reached 41.74. Not far off at all.

A big scream to the upside as fear shrieked into the market and the house of cards started to fall down. Volatility is quickly getting to a point where there could be a reversal. Y

ou would expect some kind of reversal, but remember: volatility spikes and reversals can come days later. We can still be very sluggish for several days while people despair.

As Galadriel said in the Fellowship of the Ring, "All shall love me and despair." Everyone loves to see volatility spike if there is selling. They know that, when it does, that pretty much means it will end it is just painful getting there.

There is a spike in volatility, and then there are a few days where nothing happens. Despair sets in, and then there is the reversal. We may still have more volatility spikes to come before there is any turn in the market.

VIX: 32; +0.34
VXN: 33.77; +2.09
VXO: 32.85; -1.36

Source: Investment House