Off The Highs

OK, guess we didn’t actually bottom on a 30 VIX blip. I would now classify these prices as *real*. For whatever that’s worth.

My strong advice would be to disregard anyone that rattles off 20 measures that show we are oversold, in fact extremely oversold. Disregard me too in that respect.

News flash: We’re oversold.

A basic VIX look says to get bullish if the 10 Day SMA gets more than 10% above the VIX. It’s now close to 30% above. The put/call is soaring as well.

If/when we turn up, the Punditocracy will point to some magical VIX number that signaled the bottom. It’s 20/20 hindsight at it’s finest. We’ve already deviated significantly from the January and March implosion action when we gapped down like this, but then basically held, while options declined a bit.

The problem is that if you’re a slave to some sort of *rule* like that, you already got in the market way early. Even a powerful rally may only get you back to Square 1, a fact that is glossed over on TV when the market turns and the pompoms come out.

I wish I had sage option-y advice to give in these situations, but it’s basically a complete unknown. The few spots I have long gamma, I’m gingerly buying stock back. And I’m running out of ammo. If I initiate something new, I’m using either calls or call spreads (I’m not putting on short positions here). GS is the only spot I added *gamma* yesterday, and it was effectively in the form of butterflies. I’ve flipped a little stock independent of options, but pretty disciplined with stops. GOOG looks interesting lately.