Bernie Schaeffer, however, was entirely focused on indicators showing investor psychology during a sudden sell-off - and that's what I argued with.
I have read Schaeffer's pov for a while and a bunch of other market-timer predictions, they pretty much all are looking for a huge VIX spike etc.
The problem is, as a technology investor, I don't think there are too many panic selloffs left to be had. Amat skews the picture a little, it is doing too well. But most of the former high flying sectors are down 95-99% now. This includes software, systems, telecom etc. If I owned 50,000 shares of Sunw at 50, and it is now trading in the 2's- would I panic and sell out for the last 100K? (assuming I held no margin and held the whole lot)... I doubt it. Then there is the "cash is king" argument during an economic collapse... these companies have it, another reason not to sell at 2.
Imo this "total writeoff" by individuals of what was once a fortune tied up in stocks is the complacency Schaeffer is seeing. This is not the same as not caring, jmo.
Schaeffer is looking for a 100+ level in the VIX (not the VXN), so this is primarily non-tech, but the washed out techs add a non-volitile component to the mix which has to be compensated for in the other stocks.
I think I agree with you.
Lizzie
BTW with the collars on the nyse is it even possible to get a VIX over 100 anymore? I thought they shut the mkt down when that happens. |
