VIX 01 (Jun 09 - Oct 11)

[winston]

THE SUREST BET IN ALL OF FINANCE

Our "sure bet" thesis on market volatility is running full-steam right now.

To recap our thesis, we know there are few sure bets in the financial markets… few "this is the case, and it always will be" statements we're comfortable making. The market is just too messy for those kinds of words.

But one "this is the case, and always will be" statements we'll stick by is, "Calm periods of rosy headlines and softly rising prices will always be interrupted by periods of wrenching volatility… and vice versa." That's just the way the world operates.

For a picture of this "always the case, always will be" phenomenon at work, we present the past five years of the Volatility Index (the "VIX"), the most popular gauge of market volatility and investor fear.

When the VIX is low (below 18), it indicates investors have few worries and see blue skies ahead. When the VIX is high (above 35), it indicates panic and confusion.

The last time we updated you on this idea, the Japanese earthquake had budged the market and its volatility readings a bit. Things quickly calmed down. But the past few weeks have brought incredible market declines and a soaring VIX.

This fear gauge just popped to its highest level since the 2010 "flash crash." The surest bet in finance works again.

Source: Daily Wealth

[winston]

VIX: 36.36; -2.64
VXN: 35.22; -2.63
VXO: 37.37; -2.85

Put/Call Ratio (CBOE): 1.09; +0.06

[winston]

Weekly Review

VIX. Volatility is doing the old double spike here. I talked about that this week, saying that often there will be a twin spike in volatility as it makes its highs. It did the same thing in the summer of 2010, and pretty much every time you go back in history and see spikes in the VIX, you see double spikes.

It is typically not a one-day event. The bigger rally comes a few days to weeks after the initial run. We saw an initial bounce off on the markets when the volatility levels spiked. Now the market has rolled back town to the prior lows, and volatility has spiked again.

We will see if it helps put the bottom in and starts the market back to the upside in the second bounce I am anticipating.

VIX: 43.05; +0.38
VXN: 43.47; +1.86
VXO: 42.4; +1.47

Source: Investment House

[winston]

Weekly Review

VIX. The VIX spiked higher on Friday and then reversed. It is heading very high. If this was a stock, it is narrowing into something of a triangle or a pennant after this nice surge to the upside.

It suggests a break to the upside is coming and some more selling. Before that happens, it looks to me like we will get an additional relief bounce.

After that it may roll over and then it may get truly ugly. That is what volatility is suggesting to me. We will keep an eye on this.

It is suggesting a further break higher. If that is the case, stocks will be heading the other direction.

VIX: 35.59; -4.17
VXN: 34.49; -4.94
VXO: 35.87; -3.87

Source: Investment House

[kennynah]

i think we got to revisit VIX chart....

what do you see?

[winston]

Weekly Review

VIX. VIX bounced up 6% on Friday. Not a huge move given amount of selling. That suggests that perhaps the move is overdone and maybe it will not be a significant selloff or at least a selloff that takes the indices to a new low beyond the early-August lows that sat on top of the Summer 2010 base.

We will see. This could ratchet back up. Even if it does, it still has this box at the top; a rectangle is forming. That will be some resistance that will keep it from making the break.

You could also argue a flag or pennant forming. Maybe that will break to the upside, but there simply was not much of an increase in volatility on Friday, on a day when there was some significant +2% selling on all of the indices.

VIX: 33.92; +2.1
VXN: 33; +1.64
VXO: 33.72; +2

Source: Investment House

[winston]

Weekly Review

VIX. The VIX never did fall as the market rallied. It held its pattern. It formed a pennant, and with the selling on Friday, it gapped to the upside and rose 12%.

A strong move on the VIX, and it could be that it will try to make a breakout. Of course, if the market continues selling, that is exactly what it will do.

It bounced down off of its upper trendline on Friday, so it was not clearly a case that it will going for the breakout unabated. But if there a problem over the weekend and there is further selling, it will break out.

My main point is that it never really tanked as the market posted some big upside days.

The fact that it did not fall off shows that traders are anticipating more downside.

VIX: 38.52; +4.2
VXN: 37.99; +4.34
VXO: 40.63; +7.01

Source: Investment House

[winston]

Weekly Review

VIX. Volatility started to crack on Friday. It had been holding up quite well, and that indicated that the market was still trying to bounce higher.

On Thursday and Friday it did start to crack, breaking through these gap points and prior holds in the pullback.

There is a bit of wiggle room here, and it did hold at the 50 day EMA. It can still bounce at this point.

In other words, the market could sell off, and it would ricochet higher. It is suggesting now that maybe investors are not anticipating a selloff as much as they were. That is a positive.

The market has put in a good week, and next week will be important. The test will tell whether or not it is a normal pullback that the market can rally off of, or if the sellers will come in to rip it and flip it.

Then there could be problems to the downside which would, of course, send volatility spiking.

VIX: 30.98; -0.99
VXN: 29.36; -1.31
VXO: 31.28; -1.23

Source: Investment House

[winston]

Weekly Review

The VIX closed down just 0.1% on Friday. That means it still held that break to the upside on Thursday when it gapped higher.

It is holding at a very high level, almost matching the August peak. Volatility is once again at high, reversal-type levels.

We will be watching to see if that happens. It was not able to punch higher today. There was some early selling, and it reversed off of that. We will see.

It is holding a high level. There is still worry out there, but it has not been able to break through. Maybe it is time for a reversal and a rebound from the rest of the market.

Again, we will just have to see what happens with respect to the SP500 and the other indices at their lows. That sure would indicate they might be ready to bounce. More on that in a moment.

VIX: 41.25; -0.1
VXN: 39.88; -0.37
VXO: 41.63; -0.53

Source: Investment House

[winston]

Hmmm.... Can a "Half-Empty Glass" type of guy, ever be able to see the water in the glass ?

Will The Dreaded "Double Bottom Within A Triangle" Push The S&P Down To Triple Digits? by Tyler Durden

The VIX is an ephemeral beast beloved by talking-heads and options-market-makers alike (and now FX strategists).

In a rather alarming note from CitiFX today, they are concerned over the chance of an explosive breakout as one of their favorite technical setups comes to pass - a double bottom within a triangle.

If these levels break then the team expects a test of S&P 1000-1015.

http://www.zerohedge.com/news/will-drea ... ple-digits