Thursday 18 April 2013

Volatility increasing in power

The VIX opened a touch weak, but saw two surges today, with the second one managing to briefly break into the low 18s. The VIX is gaining power, and closed +6.4% @ 17.56. Near term hourly charts offer a drop back into the 16/15s. VIX 20s now look likely within 5-7 days.


VIX'60min



VIX'daily3


Summary

More than anything today - even more surprising than the sp' breaking <1538, was the strength in the VIX. The 18s were not at all expected, and it has to be said, they are unquestionably a warning that all is no longer calm in market land.

I still expect a minor 2-3 day bounce in the main indexes, to around sp'1570s, and that should in theory cool the VIX back down to the 16/15s.


VIX 20s..on the way

What now seems clear, the equity bears - especially the option traders, can look forward to VIX breaking above the key 20 threshold. This seems very likely before April comes to a close.

With a break into the 20s, the only issue then is where does it stop.

Note that the 2012 VIX high was a mere 27, right now...I have to think that will be greatly exceeded this coming May.

more later..on the indexes