Discussion in 'Trading' started by fantastic4, Dec 18, 2008.

  1. The VIX really fell out of bed yesterday, even when it rallied back up it still ended down! This seems very bullish to me, how would others here interpert this? I'm holding some long positions in Asia over the weekend based on the VIX and the fact that we closed on support. I haven't check yet, but I also imagine that support is a 50% pullback as well.
  2. gkishot


    For me it means that the market is short term overbought.
  3. Thanks for replying gkishot. Coud you explain that to me? I always thought of the VIX as the fear indicator, lower vix= less fear.
  4. Vix moves inverse to the S&P, but not tick for tick. It moves inverse, though to varying degrees.

    Yesterday, there was a negative divergence (as the vix was tanking after open, [s&p] price was not moving up as it should have) - when the vix hit support of 44.50, it bounced and the market sold.

    Watch 44.50 area (yesterdays low) on the vix. If market is going to rally, that level needs to fail............not sure if I'd pay too much attention to the vix today - quadruple witching likely to screw with it.

  5. gkishot


    My interpretation is: lower vix = too complacent.
  6. Keep in mind that the VIX at $48 projects an overall market movement of around 14% this month....let's just keep that in mind, and also the fact that we are on an expiration Friday. The last time the VIX acted like this (very weak on a lower market) on the end of an expiration week, Monday was a big downday, and Tuesday saw one of the VIX's all time highs on its open because people got burned, badly on Monday, and bought protection like crazy on Tuesday's open. People didn't roll up there protection like they should have, and maybe this is what we're seeing here.