[madtrader]
Mon Mar 18, 10:42am PST $VIX.X
This weekend's Barrons featured a discussion on the validity of using VIX to call market tops or bottoms. The man who many called as the "Option Ayatollah", Larry McMillan finally changed his tune after suggesting low VIX reading as reason to be bearish for the past 5 months. Today, as I have been scanning headlines, Tony Saliba, the self-proclaimed options guru finally changed his view as well. Mr. Saliba has been suggesting for the past several months that we are due for a major fall thanks to the low VIX reading. Today, he is saying the "old thinking on VIX need to be nixed". For people who has been following this space, you are probably quite familiar with my long held view that VIX is a better indicator for market bottoms than tops. As I have suggested long ago that VIX is set to fall into a lower trading range. I came to this conclusion after scanning the VIX data going back to 1986, and found that a reading above the 20s is a more recent occurrence. Something that became the norm since 1995. Prior to 1995, VIX spends more than 90% of the time trading in the teens, and as low as single digits. With the more volatile tech names back to be a smaller component of the S&P, the overall volatility of the index has to come down. However, I do hold the view that it isn't where the reading is that really matters, it is where it is heading that holds the key. At this point, it is reasonable to see, at least in the foreseeable future that VIX will simply meander around the low 20s. Although my view on VIX earlier certainly isn't the popular view, but seeing the Street and the "gurus" coming around to my line of thinking is making me concerned. The low VIX reading has been viewed as signs of complacency. If the last bunch of skeptics are joining the camp and not being concerned, will the real spanking be too far behind? I suppose I will have to be more vigilant now. none.
[Harry: I tend to agree with the cautious tone near term. We are quickly coming up on the month of April. The markets have typcial sold off in this month. The lack of free funds by individuals due to tax obligations plus the positioning by the funds in advance of what is the summer slow down leaves little up side catalyst till the earnings numbers start to come in for real. As I expect the recovery to be slower than expected I don't expect much to write home about during earnings season. We will see though.]
[madtrader]
Mon Mar 18, 9:14am PST QLGC
An outright short here. The group action is terrible. This one has been lagging, but momentum rolling over to negative today. It will have to retest the recent lows. none. |
