With the Plunge Protection Team bankrolling the banks, the fear of a catastrophic failure in the financial sector has diminished greatly. Thus, fear has dissipated like the black hairs of Bernanke’s beard, and volatility has decreased. Accordingly, the VIX has pulled back to a 10-month trendline.
My hunch is that the markets will have a couple of low-volume retracement days, likely starting tomorrow, and that the VIX will stay above the trendline. However, my suspicions are that the VIX will break the long trend, and that it will be several weeks before we see volatility increasing. I believe that earnings reports will have a dampening effect on the latest bull chorus, and volatility will rise with renewed fears of an economic slowdown.
I fear for my short positions that the dollar will strengthen against the #/euro as the BOE is now considering lower rates to fend off their own mortgage panic and the Fed is rumored to be scaling back on additional rate cuts here which may encourage swapping out of treasuries to stocks as well as a strengthening of the $ …. One also needs to consider that once that happens we could also see the unwinding of the weak dollar hedge in oils and metals …. I will hold my SMN in that event and add if confirmed….but these events lead me to believe (along with the futures) that we continue to rally to the 12800-13000 area near term.
Just saying…
bad news, I have pretty much the same VIX opinion, lol.
Wood,
It’s already below the 50 and the 200 DMA.
Why show the 10-month? (Last line of defense for the bears?)
Good post wood,
support is a range not an exact amount alpha. sure 22.91 is the exact amount for the 200 day MA, but in my view it still can bounce off the 200 MA. But I recognize that this could very well be the last line of defense, and I’d be fine with changing my position, and I still have a lot of cash that I plaan on going short if it verifies my premise of a bounce, but if it goes the other way, I’ll re enter my longs.
it also looks like it’s bouncing and surpassing the 200 day as we speak, it’s right at the 200 day and climbing right now.
bollingerband is also suggesting that the price is low on the vix as well and it bounced off of it today.
Cut through the 200 day in the past, it has.
Only to macerate Jedi Dawg’s balls violently in the rebound, it does.
Follow through Vix lacks.
Your Schwarts isn’t as big as mine, I see.
Rebound? Perhaps.
But doubtful.
The P&F chart however indicates an impending 14
http://stockcharts.com/def/servlet/SharpChartv05.ServletDriver?chart=$vix,pltcdanrbo%5Bpa%5D%5Bd%5D%5Bf1!3!!!4!20]&pnf=y
Also since March 17, we’re down about 9 points on the Vix.
I haven’t figured out a way to calculate Black Swans yet but when I do I’ll post some nice math. 🙂
Good comments everyone!
Alpha, ten month was a reference to how long the VIX has been bouncing off the 200 day.
Cuervo, bring on the math! I have been so busy I haven’t had a chance to respond to your last PG post…