Friday, 5 October 2012

Volatility down on the week

With the main indexes closing higher on the week, volatility slipped lower by almost 9%, with the VIX closing in the low 14s.



VIX, weekly


So, yet another week where the bears had hopes...only to be dashed. Even the closing hour of today was another micro-failure for the bears.

The underlying, and hugely important weekly VIX cycle remains essentially floored. The only issue is when it will explode higher, not 'if'. Of course, the leveraged VIX instruments like TVIX/UVXY suffer from terrible decay, and do the standard VIX calls.

For the moment, I hold to a simple red flag warning outlook, where we should look for a weekly VIX closing >20. Until we see that level of weekly close, the more conservative bear traders should arguably just wait.

A little more later.