Tag Archives: VIX

Prepare For More Volatility

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Prepare for more volatility.  Yes and when the markets are calm, prepare for low volatility.  And to further expand on this ground breaking revelation,  when it's raining out prepare to get wet.   I know... in just a few short sentences I blew your mind.  Get used to it.

2015 is off to a rocky start.  If the market wasn't volatile enough to kick off 2015, earnings season could provide even more opportunity for the market to gesticulate violently... yes gesticulate.   It's not just your normal run of the mill volatility, its the type that makes you want to gesticulate in a violent manner.  I usually wear a sturdy set of goggles during trading hours so I don't poke my eye out.

Let me explain:

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Why This Year’s Santa Claus Rally Could Be Very Strong

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This last week the market took a tremendous hit. The S&P 500 had its worst week in a few years, down 3.5% while the VIX shot up over 80%. This has left many Wall Street analysts questioning whether there will be a Santa Claus Rally. I may be the only one saying this, but I actually think that this pullback increases the likelihood of a Santa Claus Rally. So why do I feel this?

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Is Low Volume KEY to the Market Rally?

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Much has been said about the decreasing market volume, and how seemingly every rally has a lack of participation. This view has been used to argue a bearish point of view on the market, however, I will use that view to argue a bullish point of view. The reason the volume is so low is because of a lack of conviction. Since there has not been a correction in over 3 years, investors are too nervous to put money to work. This is either because they think the market is overbought, or that the current fundamentals do not warrant the current S&P 500 valuation.

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This Last Dip Was as Typical as They Come

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This last pullback was really as typical as they come. We had a geopolitical event that caused the VIX to jump significantly. And what happened next, is that everyone started calling for a big 10-20% correction. Then, cooler heads prevailed, and institutions came roaring back and bought this market head over heals. Over the last few years, there has not been one geopolitical event that has caused a correction of more than 5%. In addition, the technical picture was so clear. We had an overbought reading on the RSI, and the pullback alleviated that. We went from a 70 RSI on the SPY to a 30 RSI. But, what is really making this past pullback so typical?

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