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Technology Stocks : Semi Equipment Analysis
SOXX 330.83+0.1%Feb 5 4:00 PM EST
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To: VIXandMore who wrote (40204)9/16/2008 12:43:39 PM
From: Return to Sender2 Recommendations  Read Replies (1) of 95880
 
I agree 100% that the absolute levels of the volatility indices are not the most important factors to look at when discussing volatility and market bottoms.

Each spike, regardless of how high, in the volatility indices will lead to a higher probability of a short term low in the market. What helps to mark major market bottoms is the high number of positive divergences present at those bottoms.

Examples seen at the 2002 bottom were lower highs in volatility, higher lows in the number of new market lows for the NASDAQ and NYSE, higher lows on the BP Indices and many other positive divergences despite the new market lows.

Currently the market is showing the same kind of potential positive divergences when compared to the bottom seen in July of this year, as was seen in October 2002, when compared to previous lows then.

What we have not seen that we did see in October 2002 was the low volume selling finally petering out and leading to a 90% upside day for the market.

I think there is a good chance that the low forming here is a capitulation low that may not, may not, be the ultimate low.

But I could be wrong.

I am planning on trading this low from the bullish perspective regardless.

RtS
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