Louis - I'm not pushing a particular VXN or VIX value level as meaningful, either - I know that other influencing factors can fudge the range.
But as that chart and a SPX/VIX chart also illustrates, the prevailing direction at any given point in time is quite valid, therefore traders ignore it at their peril.
Re: where's THE bottom - To borrow one of FLACK's terms, we are now entering the "desert period" in the quarterly earnings cycle, where a couple of things come into play -
(1) the Q1 regulatory quiet period is over, and the window is again open for insiders to sell. Anybody that wants out has to do it before the Q2 restrictions come back on. We may already be getting a taste of the answer to that one.
(2) only the companies themselves (and whomever they tell) will know what's happening in the trenches, based on internal sales and production reports. As the quarter matures, whether things have gone well or not will become increasingly apparent to anyone in touch with the company (contact is still permitted under Reg FD, just not the passing of numbers). People will act on that information.
So, we won't need to predict how things are going, the tape is going to tell us. It has been doing a bang-up job of doing just that for about two years now.
I've already made my broad bets as to what I think Q2 will be like. The semis had a good April, but that was only one month, and I don't hear anybody else chirping yet about how great things are going. Companies like IBM are not still laying people off because of a big sales pickup, and even Lord Chambers was talking things down going forward.
At the moment, people still do not want to hear about our economic problems, they have already taken a drubbing and they are tired of wallowing in it. They want to be told good news, and besides, spring is here and the sun is shining and the birds are singing, and Dorothy so wants to reach the Emerald City to meet the Wizard who will take her home.
Does this mean we make the bottom in July, after a lousy Q2 hits the press and Dorothy finally "gets it" that the economy is in trouble? Maybe, that is, if the insiders and the commercials don't crater it in their rush to get out first.
About the gold - the inevitability of it all just grows and grows, doesn't it. However, I think it prudent to allow for His Greenness to try to pull something out of his bag of tricks somewhere along the line. Keeping some dry powder on hand for such an eventuality is the easiest way to prepare for that. Any CB-related attempt to halt gold's advance at this point would only create a great buying opportunity IMO, maybe the last one |
