Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: ftth who wrote (12729)	1/7/1998 12:50:00 AM
From: ftth	Respond to of 94695

[more on volatility] Another volatility measure is Donald Dorsey's RVI (relative volatility index). It's a standard indicator in Metastock. This is a "directional" volatility system that associates a different volatility with up and down days. He has a composite indicator called Inertia, which I like the basic concept of, but I don't like certain things in the way RVI and inertia are created so I'm going to create my own twist on it. It seems to highlight some key points depending on how you use it, especially in conjunction with other indicators as an "all or none" trigger, but I still want to try my variation on it since the variation makes more sense in describing what the variations mean to me. I just have a hard time using tools or indicators that I don't have an intuitive feel for because, in the long run, you'll use it or interpret it inconsistently if you don't have an intuitive feel--especially the borderline triggers where it's necessary to make an intuitive judgemet. dh

To: ftth who wrote (12729)	1/7/1998 1:37:00 AM
From: kas1	Respond to of 94695

perhaps this is elementary to some of us, but i think it needs to be added (for the beginner) that the implied volatility is what you pay "extra" (adjusted for time-til-expire) for an option on top of its in-the-money value.

To: ftth who wrote (12729)	1/7/1998 1:48:00 AM
From: Richard J. Byrd	Respond to of 94695

Dave: Thanks for the excellent description of VIX. Even though I knew the basics of it and use it in trading, I found your description worth reading twice. You post makes wading thru the trivia often found here to be worth it! Dick

To: ftth who wrote (12729)	1/7/1998 9:47:00 AM
From: James F. Hopkins	Respond to of 94695

HI Dave; Thanks very much for giving me some idea of the VIX , I'm sure it is a handy indicator "for thoes who understand it". I tend to question most indicators a lot more than I depend on them, and generally dig around to find my own, which can also fool me. ----------------- Personally I do not see colletive wisdom in the market, I see collective emotions, that often go to extrems, between expectations and fear, to me it's a gamblers heaven or nightmare, investors are caught between that tide of emotion. -------------------- I note that you mention how the VIX went wild OCT 27th an 28th, I was at sea and the show was over by the time I got in. I did go back and look at it, and in doing that I discovered something that I'm still trying to figure out, or refine. The INDEXs every one is depending on are weighted in such a way as to not give the real picture at all. -------------------------- It takes a lot of typing to explain it and I'm not proficent in expression, I get around to it but it takes time. In short I seperated out the DOW stocks and charted them individually, and discovered that the DOW had really sold off some time before Oct27th, and the big drop was the flat weighted index mostly catching up with what had already happened..yes the indexes seem to be always playing catch up. When they do catch up, they may hang for a while but the market generally starts moving the other way and the indexes are once again playing catch up. There is a lot of the tail wagging the dog going on. ------------------------------ I'v found Market cap weighting takes out a lot of the delay built into the indexs, it better shows the flow of money. But how much better I'm not sure of yet, also something I can't get in a timly manner is up to date "short interest" I did a study of it some time ago and what was clear is that the market climed when short selling increased, and only fell off after the shorts started pulling in their horns. At any given time there is a large short interest in the market, and when it makes a big change the market follows, when it drops the market soon follows, but me not able to get up to date short interest sort of made my study acidemic. From what you explained to me about the VIX, it appears to be the short term emotional responce of thoes who watch an index, BUT could also be tied to short positions as well, and that may make it really worth my while to try to get a handel on it. Thanks again , but it's going to take me some time to figure it out my way. -------------------- Jim