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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (46255)	4/14/2000 2:44:00 PM
From: Les H	Read Replies (1) \| Respond to of 99985

U.S. Options-VIX jump may not mean stock bottom CHICAGO, April 14 (Reuters) - The Market Volatility Index (^VIX - news), the options market's gauge of investor fear, spiked to a new 52-week high on Friday as U.S. stocks took another drubbing and remained in bear territory. But analysts were divided over whether Friday's new high in the contrarian options indicator suggested the stock market was near a bottom. The VIX measures implied volatility of several Standard and Poor's 100 (^OEX - news) index option strikes and typically moves in the opposite direction as stocks. At 1:30 p.m. CDT (1810 GMT), the OEX was off 4.22 percent, or 32.83 points, at about 744.40 after hitting a low at 742.84. The cash S&P 500 index was down 65 points, or about 4.5 percent, at 1,376. On Friday, the VIX jumped to a new high of 41.13 before retracing to 38.03, up 4.08 points or 12.02 percent. Greg McMurran, chief investment officer with Analytic Investors, believes the VIX is more of a reactive indicator rather than a forecasting gauge. ``Anytime the market declines sharply the VIX will go up after the fact,' McMurran said. ``And if the market is up, the VIX will be down. It is highly correlated and not having to do with what it's forecasting for tomorrow.' But the strong upward thrust in the VIX suggests that the stock market will have more volatility. ``We are going to see volatility persist for a while,' McMurran said. Greg Simmons, portfolio manager of Linear Capital Management, said he thinks the VIX is still a valid indicator. Based on the recent upside breakout in the VIX, he said the stock market is extremely oversold. ``I'm a much better buyer than seller with the VIX in the 40s,' Simmons said. ``It's (stock market) definitely feeling around for a bottom.' It's a ``tough call' if the market has hit a bottom, gauging by the VIX alone, said Jerry Hegarty, OEX analyst at Cape Market Research. But he acknowledged that with U.S. technology stocks down five days in a row and the fact that today is a Friday, the market would be more vulnerable than usual on the downside. ``It's been a long time since we have been this low in the OEX,' said Hegarty. ``Today's low in the OEX has broken the 770.38 low that occurred on the second trading day of April this year (April 4). The OEX could go even lower.' >>>There was also a breakaway gap in the VIX yesterday. >>>Usually will run in the direction for at least one more >>>day.