I see that VXX is inversely correlated to EWP (Spain ETF) recently. Basically, the excessive VIX we have seen can be explained to a large extent by the European problems. Now that we have some stability in Europe VIX is back down. How much of US debt ceiling resolution is already priced into VIX? I think a lot. Big players know that the default won't happen. the media has successfully scared the little guy, but the little guy is not able to move the price much anyways. I am guessing that VIX may go down some once the issue is resolved but by not much.
could Gold be Up because of debt ceiling discussion? what's the connection if any? as I illustrated above, there is not much fear in VIX that can be attributed to the debt limit uncertainty. could US default fear manifest itself some other way, e.g. Gold?
I have thought about it today. I think gold is up because foreigners who buy US equity maybe hedging the dollar by buying gold.
total put/call 0.84 index put/call 1.1 equity put/call 0.62 The fear did subside since I started the thread (VIX and put/call went down) but there is still some fear present. for example, street.com poll is bearish today: Total Votes: 473 votes 1 What would best describe your stance heading into the coming week of trading? Bullish 39.53% 187 votes Bearish 48.2% 228 votes Neutral 12.26% 58 votes
I have to interject something here that I missed earlier, and it seems most have missed it: If a miracle should happen and the Washington morons actually agree on a significant decrease in spending and at the same time a significant increase in tax revenues-- certainly the right thing to do, but if they do it they are almost certain to do it wrong -- then the market will take a mild hit and go down, because the dollar will strengthen some. But it will be a "hit" in only the nominal sense, and we will all be better off in the long run. (Don't worry though if you are long, the chance of these morons doing the right thing is minuscule.)
Shortie -- do you really think sentiment indicators work? I think it is at most a 55% chance that they work.