Discussion in 'Economics' started by EqtTrdr, Jan 16, 2007.

  1. http://www.stocktiming.com/Tuesday-DailyMarketUpdate.htm

    CNBC is excitedly proclaiming that the Volatility in the market is in the lowest 1% of the last 8 years.

    CNBC's Larry Kudlow has been consistently saying that this is an unshakable, Goldilocks market and economy.

    Here is the reality and long term picture of the Volatility Index, symbol: VIX.

    Below is a long term chart of the Volatility Index.

    As you can see, its 4 year channel broke through to the upside last Summer and then fell back into the long term channel which
    was positive.

    However ... It cannot now move back to the bottom of the channel or volatility would go to ZERO. If anything close to that happened,
    then the market would face the risk of a crash because of the inability of investors and traders to remain in a state of euphoria
    and be impervious to any bad economic or political news.

    What is significant on the long term VIX chart below, is the July 21st. low. In mid December, the VIX went below that low twice on an intra-day basis,
    and neither day was able to close below that low, so that is a formidable resistance.

    During the past 3 trading days, the VIX has been moving sharply down toward that test level again. As it is doing so, note that there is now an expanding
    wedge on the VIX now, which means that we are now subject to some very high intra-day volatility swings and whipsawing.

    Re: CNBC's Larry Kudlow has been consistently saying that this is an unshakable, Goldilocks market and economy ...
    The term, Goldilocks economy, is used to describe the U.S. economy of the mid- and late-1990s as "not too hot, not too cold, but just right."
    Some economists consider this optimal, and in such situations the government usually decides not to undertake any policy measures to improve
    macroeconomic performance. Believing that this is a Goldilocks scenario is good and may well be correct, ... but believing that it is unshakable
    can be a blinding prejudice that causes one to not give equal weight and consideration of the counter balances in the market.

    "Unshakable" is euphoric commentary that has similarities to investor sentiment back in 1929. NO ... I'm not saying that this a 1929 situation, but I am
    saying that over confidence to this degree comes with a price tag of blindness to any risk conditions.

    The greatest investors have always had positive confidence in their abilities to gauge the market conditions without prejudice, and at the same time,
    to be fearfully respectful when euphoria existed. I'd just like to see a more balanced reporting perspective by the TV market personalities because they
    do have a great deal of influence on the emotions and perceptions of their viewers.

  2. It`s different this time.
  3. Its time to tune to Bloomberg.
  4. Mvic


    Kudlow is a bird that can sing only one note. Then again all these doom and gloomers have been wrong for the 2+ decades I have been in the markets (anyone remember Prechter calling for Dow 400 and a 1930 style recession for almost a decade!) . Sure we will see some small correrction this year, probably no later than april, but long term there is nowhere to go but up, the global economy is expanding and as the US makes up a large part of that it stands to reason that we will see some expansion too. The real risk is to international purchasing power if all your assets are $ denominated.
  5. S2007S


    kudlow is so repetitive its not even funny.

    goldilocks economy this, goldilocks economy that. Sooner or later there wont be a goldilocks economy.
  6. empee


    its the greatest story never told!
  7. 100% up room to go with ZERO RISK...

  8. correct