Justa -- <<More complacency at the same levels today than back then. My call for NDX to new lows still stands.>>
I wonder if the "more" complacency now doesn't make an element of sense. Why? Well, I've got two reasons at least. One, if we assume that the Sept. downdraft was a lot of panic selling/buying, then a lot of folks now own a different portfolio than they did before, not showing huge losing positions perhaps or even some bargains. Two: right now, in theory anyway, most portfolios are likely flat since Sept 10th of last year, hardly a reason to cause panic. The "terrible downdraft" that was 2000-2001 seems but a distant memory now, so fear has abated. That is human nature, it seems to me, and the farther we get from that brutal haircut, the harder it will be to cause panic.
Anyway, from my point of view, comparing what the VIX was at the last time the market was at a certain price doesn't make for an apples to apples comparison. (BTW, even using OEX for this not the NDX, since that's what the VIX is correlated to, the comparison you pointed out is equally spot on). Instead, the trend of the VIX is more interesting. Don't get me wrong. . . I do think there's complacency here. And we may very well get new NDX lows.
That said, by historical standards, the Sept bottom had high enough VIX readings that it COULD stand. I wonder if you wouldn't find the same VIX trend (similar price/lower VIX value) if you checked other panic bottoms (temporary or not) and the periods of rally/dip after that?
just food for thought from a freep |
