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Once again Barron's timing is off on the use of VIX. One of Barron's
columnists wrote last November that a (then) low VIX reading was forecasting
a sharp sell-off in the market. (At the same time, may RT traders were
calling for the same major sell-off). My own historical research had
revealed that when a major bottom was put in place, a low VIX could be
associated with a modest correction rather than a major sell-off. I sent the
attached chart to the columnist together with a suggestion that he do more
complete research before making such statements. The attached chart (current
data top two charts, 1998 data bottom two charts)was also published to RT.
The configuration of the market is now a bit different than it was when the
original piece was published so low VIX readings must be interpreted a bit
differently i.e. low VIX readings are likely more critical than they were in
the post-911 rally.
The fact is, that VIX must be carefully interpreted in light of the major
price patterns, breadth, and other indicators.
Earl
----- Original Message -----
From: "BobR" <bobrabcd@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, March 20, 2002 9:26 PM
Subject: Re: [RT] For the folks with VIX interest
Leave it to Barrons to say not to worry about a low vix...another example of
ignore the media please. Its a question of probability and ye olde meany
reversion.
bobr
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