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To: pcyhuang who wrote (1290)	8/21/2007 8:21:46 AM
From: SouthFloridaGuy	Read Replies (1) of 1718

It's quite possibly different because structured credit has distorted the signals that often led to gradual volatility. The uninhibited increase in vol from near single digits to mid 30's within months is close to unprecedented. While I personally knew the structured bid was out there, and I knew it was distorting things, I didn't know to what extent - nobody really knew and it would be foolhardy for one's P&L to guess otherwise by shorting or not staying in the rally. So yes, the market COULD make new highs, but it would be a weak rally and would most likely be followed by a crash if the 200 day moving average level of volatility is 20%+, a figure often associated with bear markets. The switch between bear and bull has been turned on overnight. A warning shot has been given and I took a 4% peak to trough loss after being in this market for 3 years+. I'd say that's pretty good if the market makes a 20%+ decline. You should look at 1987 for a reference.

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