MARKET INDEX TECHNICAL ANALYSIS - MITA Message Board

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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA

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To: Steve Lee who wrote (10540)	2/17/2002 1:49:13 PM
From: Dexter Lives On	Read Replies (1) of 19219

Steve, No need to apologize - I had a pretty good idea where you were coming from. I agree with the option volatility measures as a better indicator, that's why I did that little historical study of VIX last week. BTW I prefer VIX to VXN as it is a better measure of the broader market and suits my purposes. My best guess is that we are range bound with an upward bias for the next couple of months. With all of the "cheap" puts (and calls) sold recently, option writers are indicating lower market volatility for the next while. A lower range for implied volatilities will mean nice profits for the writers with little movement on the underlying. I don't interpret a lower VIX reading, in combination with high P/C, as complacency - if anything I would infer the opposite. It is the only interpretation of the high P/C's and low implied volatility measures that I can come up with. Would be glad to hear other theories... Rob

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