VIX closed UP 12.31% on a Friday, Indices closed near low of the day.
This can be attributed to many factors like political, earnings related & option expiry.
BUT..i am finding it hard to see WHY VIX would jump so much ?
IS VIX telling us more than what we want to know or are ready for ?
Monday MAY give us a clear picture of VIX jump.
Also surprisingly, Gold, oil also moved UP, while markets headed south.
Internals of the market were not as bad as VIX trying to tell us, here are the numbers :
Down volume led by 2.7 to 1 in NYSE & 2.57 to 1 in Nasdaq
Declining stocks led by 1.92 to 1 in NYSE & 2.02 to 1 in Nasdaq
As you can clearly see there is no real damage in market strength, this gives me a CONTRARY picture from VIX ?
S&P 500 is down 2.91% from its high
S&P 500 is still above 50 DMA
RSI in S&P 500 is 48.14
SO..we are sitting just above recent low of 1318.51 ......
Markets are behaving in a very erratic manner, which does NOT give comfort to bull or bear......extremely narrow trading range is being established.
On good days we are trying to move above 50 DMA, BUT on down days we are getting near 50 DMA.
Are we going to break this narrow trading range ?
I have a feeling that, this how we are going to plod along.
Now the question is ?
How to participate in this market ?
AGAIN the answer is the same, follow what is working on a day to day basis...no real trend will emerge until Q4....
Go with today's movers list & get trading ideas.
Also knowing about fundamental & MORE important TECHNICAL picture will always help in stock selection.
Some popular names are behaving poorly, AAPL & GOOG comes to mind as an example.
SO..try not to bank on past winners too much.
I have a feeling that Gold, Silver MAY push higher again. Gold has shown relative strength all along.The best way to play these is through GLD & SLV...stocks tend to defy metal prices. Try to have some exposure in these areas.
Staying nimble is also prudent.
Good luck in your OWN home work.
Markets are tough these days.
BLOG does NOT give buy or sell.
Saleem
2 comments:
S
Good day to you
Can you provide some input on understanding the VIX
I can not get my brain around it
Great blog and thanks
IMHO, look to some protection as in Dividends
Also look at what the institutions are buying
I got some AAPL PPL and DD-FCX POT LULU VFC spread the risk over several good stocks-but may be way early to predict market direction, in any event
The very best to all--it is 85% in DC
Hi C,
I monitor VIX to analyze what hedge funds & big institution are doing.
Movement in VIX is another tool which i monitor closely.....
BUT i rely much MORE on marketernals & RSI.....this allows me to crosscheck VIX against market breadth/RSI.
Saleem
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