Posted on Oct 19, 2016 by WHC Bassetti.
We have been watching closely as price fell out of the triangle. Under different circmstances we might have taken it as a short signal. But in the present context we completely discounted the action. The other major indices did not confirm. There was no confirmation or follow-through.) So once again the old principle is proven: The present trend tends to continue. The present trend is obviously sideways choppy, with contrarians in charge. The length and vigor of this trend are impressive. (Illustrating Keynes’ famous dictum: The market can remain irrational longer than you can remain solvent.
Posted on Oct 06, 2016 by WHC Bassetti.
We are in, and have been in, one of the most difficult periods in our 55 years in the market. We re not alone in this assessment of the market. Hedge funds are dropping like flies and mutual funds are watching investors flee like refugees leaving Syria.
Posted on Sep 28, 2016 by WHC Bassetti.
Being that the short view is so tedious, we thought we would take a look at the long view. It may surprise you, but the bull market which started in mar09 is alive and –we might argue– well. Although that contravenes the tedious description. We are presently in a side wave of that market, brought about by the breaking of the mar09 trendline.
Posted on Sep 22, 2016 by WHC Bassetti.
The formation is formless here and the trendline is more or less invented, so buying at this point requires some boldness. It would be more conservative to wait for the old high to be taken out. But there is some resemblance to the a-b-g-z wave in a weird way. Besides you can always erase a mistake with an exit. Other issues are showing the same pattern and the Fed just punted on a rate rise. Let’s celebrate! Of course we await confirmation but we bought anyway.
Posted on Sep 14, 2016 by WHC Bassetti.
VIX attempts to measure the expected 30 day volatility of the SPX by averaging the weighted prices of SPX puts and calls over a wide range of strike prices. Financial journalists always on the lookout to add drama to the boring world of FASB and billion dollar mergers have called the index “the fear index”. There is in fact a negative correlation between the index and SPX prices. You might think of it this way: always hyper sensitive traders hear the market say boo and they spook like John Wayne’s cattle herd and run for cover. Their cover is puts. This immediately drives up the prices of puts and the implied volatilities of those puts. The VIX is a measurement of these market mechanics. When the panic passes volatility reverts to the mean.