Time to buy?

Posted on Sep 22, 2016 by .

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0922spx

http://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=0&mn=6&dy=0&id=p70142979615&a=266398464

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.

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What you really need to know about VIX… and no more…

Posted on Sep 14, 2016 by .

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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.

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Still waiting…

Posted on Aug 25, 2016 by .

0

0825spx

http://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=0&mn=6&dy=0&id=p70142979615&a=266398464

We are in a historically quiet period.  You could almost say we are in the eye of the hurricane.  For perspective the range here, in what now appears a rectangle, is approx .01.  This subdued volatility and freakishly narrow range has persisted for 31 days.

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