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Strategies & Market Trends : The New Economy and its Winners

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To: Wizard who wrote (13008)	7/24/2002 10:00:15 AM
From: damniseedemons	Read Replies (1) of 57684

Hi Wizard, thanks for the interesting VIX history/education. I don't buy the notion that high volatility means (or effects) inefficiency. There is plenty of liquidity to keep the markets reasonably efficient (unlike the sudden run for terrorist insurance). I'd say the markets' inefficiency merely stems from trading curbs to the downside. Without them, the markets probably would have been a lot lower, sooner. Back to the VIX as a technical indicator... Again, it is generally true that a trading indicator's effectiveness is inversely proportional to its popularity. I'd also note that a VIX above 25 used to be considered a "buy signal," then 30, then 40, now it has been well above 40 (50 in fact) for a little while now and all the while the market goes down. The reality of the situation is that the VIX has not been a reliable indicator. Regards, -Salim

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