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

To: Doug who wrote (66870)	1/15/2001 5:14:29 AM
From: Square_Dealings	Read Replies (2) \| Respond to of 99985

"The use of the VIX for assessing NAZ market timing may be questionable." I have read several articles lately where people are suggesting the same thing, but the VIX has still been a fairly good indicator of the risk premiums in the broad market over the last year or so. And it has been useful in determining the probability of short term lows or highs in the Naz when used together with other indicators. I think that many are trying to raise the argument that the VIX isn't useful because there is a major divergence happening in that if the Naz has put in a significant bottom then its unusual that the VIX never reached historical levels that marked such turns. I still believe that history will repeat and that the reason we haven't seen a spike in the VIX is that we haven't seen the bottom yet on the major indexes yet. That will come in the 3rd stage of the bear market, the capitulation stage. Of course it doesn't mean that all stocks are going to go down, but I still think many of the big cap stocks, tech and non tech are significantly overvalued relative to earnings prospects over the next few years. When people realize that rate cuts, tax cuts, and bailouts aren't going to change things in a short time, then we will get the spike in the VIX imo. M.