J.T.,
Well, will just have to let the market tell us what to do in the end, but my picture of 1999 is one of increasing uncertainty leading to the end of the year and at this point the extreme bullishness present is a red flag to me. We are back to having a market priced and primed for perfection, and most always people don't ever see perfection. What will they do when disappointed?
Re VIX in '85, you are quite correct - during the 28% run up the VIX was very flat - didn't even change that much during the choppy period form Sept through the end of the year.
However, the picture in July 96 looks more like ours now. Not identical, but similar - more volitility swings. Interestingly, July 1 was a local VIX bottom. Market dropped 10% over the next three weeks.
10/22/97 - VIX in a fairly tight and flat range for most of the year, prior to this had come down from a local high in Sept. 10% off the indexes over next few days.
7/20/98 - again, coming off a fairly flat range. 26% drop.
Today, dropping quickly out of a three month flat range, looks to hit a 12 month low. As in prior examples, ranges and drop are below 200D MA of VIX.
At any rate, I'm not suggesting that VIX is infallible or proves anything, but I found the investigation interesting and another heads up no matter what the direction.
Michael |
