VIX and TED to explode !

Discussion in 'Trading' started by Digs, Jul 15, 2008.

  1. Digs


    Bears wont take profits on short selling until extremes are reached.

    You dont get all dressed up and not go to the party.

    In the last two weeks the only rallies have been inspired by BEN talk. All has failed. The 60min ES can not break the 50 hour moving average.

    VIX above 35, before any bear profit taking.

    The TED spread is not helping.
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  2. don't cover 'til chapter 11

  3. We have stalemate right now - bulls really don't want to buy and get smoked again like the last 3 times but they also don't want to sell the panic bottom like the last 3 times.

    And that's why we see a bullish divergence in the VIX and TED spread.

    This financial crisis will soon pass. You can only cry wolf so many times before people just yawn.

    The next leg lower has to be led by tech and commodity stocks as recession fears take over.
  4. SPX puts are not always a very effective way for PM's to hedge, and as a result are turning more and more to individual stock puts and this is one of the reason's why we have yet to see the VIX over 30, in my opinion.

    Also of note, the VIX is relatively "low" because it is staying in-line with actual vol - - - which hasn't increased much.

    20-Day historical vol of the SPX is about 21.
  5. Digs


    Also another warning the energy sector sold off today, this was the last bastion of the stock bulls. On Ben saying growth may slow, thus hurting energy coy profits.

    The move south on the SPY can be lead by the XLE (energy) if the XLF(financials) stabilises.

    The only rally will be the shorts taking profits, not the bulls making new positions.
  6. Digs


    .."And that's why we see a bullish divergence in the VIX and TED spread. "..

    What divergence, how do get that conclusion ?

    .."This financial crisis will soon pass. You can only cry wolf so many times before people just yawn."...

    Sure if your time frame is months, like end of 2009.

    .."cry wolf"...

    There is no cry wolf mate, SPY is down 20%+ !!!????
  7. This move down in SPX has been relentless but - the VIX and TED haven't confirm the move by hitting new highs - so I see that as a bullish divergence.

    Paulson asked Congress for a blank check in bailing out FRE/FNM - so that means financial calamity will be avoided. We spent 3 trillion in Iraq for nothing. I'm sure we will spend at least that much to ensure the stability of our financial system.

    The financial crises is nearly over.

    The bigger problem now is inflation and unemployment - and when the market finally realizes that they will crush all the stocks that investors have been hiding in especially tech and commodity stocks.

    There is no safe place to hide in a real bear/deflation senerio.
  8. Digs


    Ok Understand your divergence thesis.

    You correctly recognise that unemployment is the next factor accelerate.

    Further job weakness will only accerlate housing issues, thus forcing house prices down, with another leg down in financials.

    The financial crises is not over. We have merely done the first plunge.

    God help the financials (and other sectors) if a full blown recession is recognised.
  9. IMHO it won't make the last spike (or worse/better yet an even more pronounced spike) until tomorrow or the next day. Or may calm down a bit for a few and then capitulation.

    Make no mistake about it - barring some new concocted intervention, we will get a panic and classic "run for the exits".

    Again I think the OP that mentioned commodities and energy stocks getting thrown out with the bath water sounds most probable.gA
  10. God does not seem to care anymore... :cool:
    #10     Jul 15, 2008