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To: damniseedemons who wrote (13005)	7/24/2002 9:44:37 AM
From: Wizard	Read Replies (2) \| Respond to of 57684

Hi Sal, A high VIX does mean that the financial markets are under severe stress and not working efficiently. It was written about over 5 years ago in a research piece that was distributed by Morgan Stanley's derivatives group. VIX spikes often coincide with huge credit spreads relative to treasuries, another sign of extreme stress on the system, which is true today. The fed has typically eased in these circumstances. Similar to trying to buy insurance on tall buildings after 9/11, there is simply no efficient market for such when a panic is on... It is this kind of time when the Fed must time its entry well and restore working order by telling financial institutions it will support them through 0% interest rates if need be... Of course, this is only short-term relief and we would have to hope that the economy can grow again but at this point, the system is simply under panicky stress. The SPX has traded down more than 2% for four consecutive sessions, which has only happened twice (1930's and 70's) since the inception of the index.

To: damniseedemons who wrote (13005)	7/24/2002 10:22:47 PM
From: techanalyst1	Respond to of 57684

stockcharts.com[h,a]dacayiay[de][pb9!b13!f][vc60][iUb14!Lb9]&pref=G Plot the vix against an rsi. When you see it very very overbought then you probably have a good tradable bottom. You'll notice that the vix was lower in times past but overbought and the fact that it took so long to get very overbought this time is why I think it got so relatively high. "Most" bottoms aren't "V" shaped and usually give you a chance to buy on a retrace of part or all of the rally. Since I think that a good part of this was short covering and have doubts as to the ability to just fly again (and if most shorts already covered, they won't provide the spark for additional gains), there is a good chance we slip back down. But.... with vix being that high and overbought three big negative tic days in a row on heavy volume, so many new lows vs hardly any new highs, the sp off nearly a perfect 50% I'd give this bottom a good chance of holding this time. We're pretty far from moving averages and so even if we do travel higher in the next few days, I still think there is a good chance we eventually retrace this low in the next few days or weeks. Earnings are out, so we already know the bad news (until new warnings I guess), so why wouldn't the low hold for a while anyway? TA