Friday 7 September 2012

Volatility whacked lower again

Whilst the indexes largely consolidated yesterdays massive gains, the VIX was whacked a further 8% lower today, and now resides in the lowly 14s.

The big question now is whether VIX breaks the low of Aug'17th of 13.30.


VIX'60min



VIX'daily



VIX' weekly


Summary

A huge - and possibly significant bearish engulfing candle on the VIX weekly cycle, with the VIX losing almost 18% this week. It could be signifying a huge new up move in the markets - the great anticipation of QE3 from the Bernanke.

Unless you believe VIX is going sub'10 in the weeks..and months ahead - with a 'booming economy', I just think this VIX move is another bonus to those bears who are bold enough to re-short next week. In option land, this VIX drop represents a huge discount for index puts and VIX calls.

However, as noted many times, until VIX starts put in a few daily closes in the low 20s, any index declines are to be dismissed.

More later.