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Think of VIX as a warning bell which says "be alert" rather than a trading
signal which says go short or long. Low values say be alert for weakness,
high values for strength. Ditto for breadth and other non-price indicators
as warning bells. Ultimately, one trades price rather than VIX so it is the
price pattern which must rule.
What VIX is saying right now is that the market could be dangerous to
downside and price rallies without a major increase in VIX should be watched
carefully.
Earl
----- Original Message -----
From: "Lee Morris" <LMorris@xxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Thursday, March 21, 2002 11:31 AM
Subject: RE: [RT] For the folks with VIX interest
> thks that is what I wanted to hear as it confirms my game plan. Just one
> more question though, if this is the case then I assume you would not
> expect the vix to move much from its current area as we make the nearby
low,
> but then to precede lower (any idea how low) as we rally to our upper
> target. Is this right and if so how can you use the vix to determine when
> the final near term top is in or maybe we must just rely on other methods.
> thks for your thoughts
>
> -----Original Message-----
> From: Earl Adamy [mailto:eadamy@xxxxxxxxxx]
> Sent: Thursday, March 21, 2002 1:17 PM
> To: realtraders@xxxxxxxxxxxxxxx
> Subject: Re: [RT] For the folks with VIX interest
>
>
> That the low VIX readings are more critical now than they were earlier
i.e.
> I think it was unlikely that equities would rally directly from VIX in
20+-
> range accompanied by severe breadth divergences in NYSE and a general
> pattern of price weakness. I do think we are getting close to a low here
> SP02M around 1132 and expect a rally. Still looking for 1250+ within a
month
> ... then likely a major decline.
>
> Earl
>
> ----- Original Message -----
> From: "Lee Morris" <LMorris@xxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Thursday, March 21, 2002 11:11 AM
> Subject: RE: [RT] For the folks with VIX interest
>
>
> > so what is your current interpretation of the vix
> > -----Original Message-----
> > From: Earl Adamy [mailto:eadamy@xxxxxxxxxx]
> > Sent: Thursday, March 21, 2002 11:21 AM
> > To: realtraders@xxxxxxxxxxxxxxx
> > Subject: Re: [RT] For the folks with VIX interest
> >
> >
> > 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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> >
>
>
>
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