VIX - The Market Seismograph

[Fivetears]

VIX Index of Volatility Surges to Highest Since 2003
The benchmark for U.S. stock volatility rose to the highest since March 2003 after the Dow Jones Industrial Average plunged 343 points and then closed almost unchanged. The Chicago Board Options Exchange Volatility Index closed at 30.83. It reached 37.50, the highest since U.S. stocks began a bull market in October 2002.

Higher readings in the VIX, derived from prices paid for Standard & Poor's 500 Index options, indicate traders expect bigger share-price swings in the next 30 days. The gauge, known as a "gauge of investor fear", tends to increase as stocks fall. The VIX has more than doubled since the S&P 500 advanced to a record on July 19.

The VIX has come within 2 points of 50 on only three occasions in the past decade. The first, on Oct. 8, 1998, came as losses mounted from Russia defaulting on its debt. It reached another peak 10 days after the terrorist attacks in September 2001, and again surged in July 2002 as fallout from Enron.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aACu7X0ue8vo&refer=home

WOW! :nuts:
...and we recovered every time.

[Birchtree]

Members should contemplate viewing the VIX spiking as a bullish sign from a contrarian standpoint.

[thechartpatterntrader]

Excellent post

[vectorman]

Free info from a pay site.

" Watch the VIX and the S&P 500 on an hourly chart during the next few days."

http://stocktiming.com/Thursday-DailyMarketUpdate.htm

[vectorman]

The VIX is testing two lines of support near 20. If we break below 20 the market will go higher. But if 20 holds, then a backtest (profit taking) back toward 25 may happen. Tomorrow there is no economic news so the violatility may be limited with a bias to start working toward new markets highs. Alot of TA's watch the VIX so if the uptrend holds, investors may lighten up alittle more to redeploy some cash at lower prices.


If you want to see want effects your funds, read...read...read, like this link on support/resistence lines. Or other links about indicators such as the VIX,RSI,volume, or MACD that can be use to help see limited market direction. :)

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:support_an d_resistance
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:movi ng_average_conve
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:intr oduction_to_mark#bullish_percent_index_bpi
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:rela tive_strength_index_rsi

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http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=VIX

[Birchtree]

I noticed the Vix closed at 18.65 - and now trending lower. Is that right ayla?

[vectorman]

Tomorrow should be interesting, and maybe the next few days.

You can see as a comparison after the big sell off this spring, the VIX trended down to fill a 'gap up' for the end of Feb. Then the VIX made an uptrend until it found some resistence. The VIX is about to fill a 'gap up' from the end of July, so it will be interesting to see where we go after that happens, especially now that we have a 'gap down' today to fill.

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http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=VIX

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:gaps_and_g ap_analysis

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:intr oduction_to_mark#volatility_index_vix

[tsptalk]

The VIX hit 29 today (28.99).

[Bullitt]

Complete breakdown of the 23 level today on the VIX.

[Bullitt]

More signs of investor complacency.

While some market participants are citing this week's slide in the CBOE Volatility Index as evidence the first few months of 2010 won't provide a major correction in stocks, history says the VIX has almost no predictive power.

Earlier this week, the volatility index—or VIX, as it is commonly called—pushed below 20 for the first time since August 2008. Given the index is often referred to as the market's "fear gauge" and had been as high as 80 just more than a year ago, the push below 20 was met with celebration. Bulls said the drop to a more historically normal level of 10 to 20 proves traders believe the economy is on the mend, with the VIX down another 1.2% at 19.47 on Thursday.http://online.wsj.com/article/SB10001424052748704039704574616341416160668.html

[Bullitt]

The VIX is telling us something here. Bear Trap!

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[fedgolfer]

here's the VIX on the weekly charts... as a contrarian indicator, under the cloud is bullish for the markets.

http://stockcharts.com/h-sc/ui?s=$VIX&p=W&yr=3&mn=0&dy=0&id=p53929693439

The size of the red cloud on the right side of the chart is gigantic. We would need some catastrohpic events to cause us to break that cloud... I see a vix of less than 25 for a long time... until it gets into that red cloud i'm buying on the dips. But, I agree we need to see a pullback for the 50 dma or so on the $spx to get the bull/bear seesaw back in favor of another bull run.

[tsptalk]

The VIX is up over 5 pts this afternoon, to over 27 (from lows near 17). That's quite a 3-day move.

[Bullitt]

Wow, go VIX go! And to think about how many blogs and who knows how many CNBC'ers were saying, "Short the VIX, it's different this time with all the liquidity sloshing around," at the start of 2010. Yup, short volatility.... Bear trap.

[Bullitt]

VIX breaking out from its 8 day downtrend line today.

[tsptalk]

I saw that bull flag the other day on the VIX and was a little worried. Now we see the breakout.

http://www.tsptalk.com/images/mb/020410a.gif

[Bullitt]

There it goes again below 20. Will 19 act as support? That's 9 down days in a row and I am having a very hard time in trying to understand the complacency among investors right now. All I can think of is IRA contributions at this 'correction' derived from tax returns are serving to provide an inflow of liquidity.

[Bullitt]

We're now back to levels that sold us off from the January highs. Couple that with an oversold exhaustion gap lower into support and bulls may have something to worry about this weekend.

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[James48843]

Thanks Bullitt-

yes- that is looking a bit interesting.

Monday-- Up? or down?

I am thinking one more day squeezing higher on Monday might be possible, before the cards tumble again.

[tsptalk]

I'm thinking of buying VXX (http://finance.yahoo.com/q?s=vxx)on any market strength Monday morning.

Has anyone ever traded this VIX ETN? Looks like it can be a wild ride.

[Bullitt]

I have thought about it, but after my experience in UNG where I was actually right but the security failed to properly track nat gas, I'm done with any ETF that buys futures. That's the problem with VXX; the fund manager has to keep selling low and buying high, in turn driving down the price. The crooks tell us retailers it's a hedge, but they short the heck out of it.

However, there is a caveat.... VXX is very heavily shorted. We all know how big the VIX can move on any given down day and that could potentially turn into a big one or two day gain if trading VXX.

If I were to do it, I'd have a stop and I'd be ready to sell it at market on the open on any big up day. Last time we corrected, VXX got up to the 50 dma and it very easily could do that again which would be 5 points from here. I believe we're in bear mode, so the VIX could potentially rise at least 10 points from here.

Wow, is that VIX/VXX screaming 'BUY ME' right now or what?

[tsptalk]

Wow, is that VIX/VXX screaming 'BUY ME' right now or what?
I know! I am trying to think of the best way to aggressively play a market short in my IRA. We can't short in IRA's and the 3X bear ETFs are too big of a rip off. I thought buying the VIX ETFs might be a good idea.

Thanks for the info. I had the same experience with the UNG. It makes you feel like a fool when they screw with you like that.

[Bullitt]

VXZ might have better tracking than VXX.

[Birchtree]

The VIX had an intraday low of 17.23 on Friday - we'll bust that level on Monday. There are many call options purchased on the VIX expecting it to spike higher again - money that will expire worthless. I'm waiting to make a move to shift some of my S fund to G.

[dannyboy]

The VIX had an intraday low of 17.23 on Friday - we'll bust that level on Monday. There are many call options purchased on the VIX expecting it to spike higher again - money that will expire worthless. I'm waiting to make a move to shift some of my S fund to G.
:) I would be very interested in knowing ,
what do the knowledgeable TSPtalkers out there think?
I'm interested in hering as much as possible! :D
Thanks,

[Birchtree]

Betula papyrifera will tell you not to be comfortable - stay nervous but be invested. You can bet as the VIX continues to drop and the crowd leans heavily in one direction all hell will break again and a reversal increases substantially. But until that time - enjoy the market serenity.

[Birchtree]

The likelihood is that the VIX has initiated a bottoming process that could still take some time to develop. What this means is that it's not yet time to sell the farm but it could be in the not too distant future. Remain vigilant but enjoy the gains.