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[madtrader]
Mon Mar 4, 1:12pm PST Market
Closing right near the high. Friday morning, before this massive rally began. I said it was going to be the turn around day that just crushes the shorts. Guess what? I just saw another option "guru" that doesn't believe in this rally. Bernie Shaeffer of Shaeffer's Investment Research went on Yahoo Finance Vision and said:"Don't believe this rally, it's a short squeeze." DUH! Of course the shorts are getting squeezed. There will always be some shorts that gets squeezed in a rally. But the fact of matter is, DJI broke out with a 500 point run to a new year high, is that an illusion? I don't think so. At what point a rally is bogus and a selloff is real? How does one really decide? Last time I checked, the gains I booked stays in my account, it doesn't get taken away just because some "guru" claims it isn't suppose to be real. Quite frankly, I am just having a good time watching and hearing these guys stay in a state of denial. I am more than happy to have these bears snicker at this tape. We are back to the classic climbing a wall of worry rally. Sooner or later, the bears will capitulate. By then, the easy money will have been made. So, keep it up guys. Don't believe this rally. none.
[madtrader]
Mon Mar 4, 12:41pm PST $VIX.X
Couldn't help but notice another piece by Tony Saliba on Realmoney.com. The headline says:"Beware of the falling VIX, These low volatility levels suggest that this rally may not hold." I don't know, I am getting a bit tired of these guys crying wolf about the VIX for the past 4 months now. At what point are they going to admit that they are wrong, or VIX is just not a reliable tool for calling tops. Besides, as I have suggested before, VIX in and of itself is merely an indicator that oscillates in a range. I just don't believe one should use most of the traditional technical analysis tools to try and interpret the VIX. I will go one step further and suggests that by trying to interpret VIX in the same manner as one would with a stock, it will be harmful to your portfolio. Why? Stocks have infinite upside and limited downside. While VIX has finite upside and downside. If one must try and analyze VIX's potential moving ranges, perhaps the best tools to use are simply stochastic and Bollinger Bands. Attempts to make it more complicated than it is will simply futile. I spent a great deal of time going over the history of VIX reading (over 17 years worth) and to my amazement that VIX spends bulk of it's time meandering in the teens. And we are heading back to what I would call a normalized market, with VIX trapped in the teens. The reason I can put a finger on all the option gurus and technicians for calling a market drop based on "low" VIX readings in the 20s is that they all use recent VIX data as a guide. Recent being 1995 to present. One can certainly make a case that 1995 to present is not a normal market compared to over 100 years of market data. We have experienced an once in a life bubble during that period. I am suggesting that we are no longer in such an environment. And future volatility in the market will resort to the long term historical mean. Which is why I have been calling the VIX to fall into the teens. My advise is that don't let the talking heads dupe you into selling near the lows. none. |
