Monday, May 4, 2009

VIX- Coiling Around 35


Bulls need to be very weary here. Seeing frothy panic aggressive short covering/buying all over the place. Penny stocks leading the pack, while i have been playing the smaller priced arena, i think we now look very vulnerable here. Time to trim, take profits, short with tight stops in my humble opinion. VIX continues to set up in this giant falling wedge. Not sure how valid this pattern is right now but seeing some early warnings signs of bullish complacency and it seems people forget how much stocks can hurt if you get too trusting of them. Today's close will be very important in my opinion. Please note: i could be dead wrong, in which case buy high and sell higher. hahaha!

11 comments:

Shawn said...

"Today's close will be very important in my opinion".

Would you mind elaborate that a little? Thanks

Stewie said...

we either close strong and keep rallying or we reverse and give up some of these monster gains. we'll see.

Stewie said...

whatever happens at the close could set the tone for tomorrow's session. we either rally hard and tmrw i'll be looking to get long into weakness or we close kind of poorly and i will be looking for a some short setups for tmrw.

Christian said...

I seems that we'll close strong.

Stewie said...

Chris. got out of shorts. tiny losses. in FEED, WRES, HTE and STP. all long.

Paul said...

would you mind giving some thoughts on how the VIX is correlated with stocks?

Shawn said...

Stewie, Have a few charts for sharing. I am looking for VIX $32, TLT $95, and USD $83.4 to go short.

These probably correlate to SPX 930s, or even double top 943.

Would appreciate any comments you have. Thanks!

1) TLT http://img49.imageshack.us/img49/1263/tlt.jpg

2) USD http://img49.imageshack.us/img49/1939/usd.jpg

3) VIX http://img513.imageshack.us/img513/4058/vix.jpg

4) IYR http://img394.imageshack.us/img394/3749/iyr.jpg

5) XLF http://img119.imageshack.us/img119/2003/xlf.jpg

Stewie said...

i am not an options guy so i'll give you the basic slimmed down version. I am sure there are much smarter guys out there when it comes to explaining the VIX. When VIX drifts lower it means that people are less willing to insure their portfolios and are more aggressive in their buying activity. When VIX sky rockets, it means that there's a big amount of fear factor in the markets as trader scramble to insure their portfolios. having said all that VIX had a very poor close today from a charting standpoint which means more upside to come short term.

Stewie said...

Paul. i don;t like to predict a specific number where SPX will top. I can tell you this: TLT, USD and VIX look bearish. XLF and IYR are very bullish. rally still on.

Stewie said...

The VIX chart i just posted shows that low 30s could be in sight. Which means more bull to come.

Anonymous said...

Here's a great article on the VIX that just came out at the CBOE.

http://www.cboe.com/publish/ResearchNotes/Research_notes_5-1-09_Issue_2.pdf

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