Comments on: The Heartbeat Of The Stock Market Goes Thump http://www.tradersnarrative.com/the-heartbeat-of-the-stock-market-goes-thump-1909.html Freshly squeezed market commentary & analysis Thu, 18 Mar 2010 06:42:35 +0000 http://wordpress.org/?v=2.0.2 by: Drewster http://www.tradersnarrative.com/the-heartbeat-of-the-stock-market-goes-thump-1909.html#comment-34954 Thu, 02 Oct 2008 21:11:14 +0000 http://www.tradersnarrative.com/the-heartbeat-of-the-stock-market-goes-thump-1909.html#comment-34954 I agree that VIX has been a great indicator and tool to identify what became, in hindsight, great buying opportunities. We've had six VIX spikes above 30 over the last 14 months, and all were great plays for long trades. The only thing I would perhaps disagree here is the contention that the VXN, or Nasdaq Volatility Index, needs to go up further to previous levels as established in 2000 and 2001. It's my opinion that you may not see that happen here and still see a bottom in the making right now (at least on volatility), since the 2000-2001 crash in large part caused by a crash in tech stocks due to their previous huge multi-year rally. The dot.com bubble, made up of tech stocks, drove the market to unbelievable heights, so huge volatility once the inevitable crash occurred was to be expected. The tech stocks did not drive the latest bubble. They participated, but the recent bull market was driven by real estate and financie. Now, if you could put together a volatility index on the Financial or Real Estate indices, then I bet you'd see huge volatility that might make VXN look tame. I agree that VIX has been a great indicator and tool to identify what became, in hindsight, great buying opportunities. We’ve had six VIX spikes above 30 over the last 14 months, and all were great plays for long trades.

The only thing I would perhaps disagree here is the contention that the VXN, or Nasdaq Volatility Index, needs to go up further to previous levels as established in 2000 and 2001. It’s my opinion that you may not see that happen here and still see a bottom in the making right now (at least on volatility), since the 2000-2001 crash in large part caused by a crash in tech stocks due to their previous huge multi-year rally. The dot.com bubble, made up of tech stocks, drove the market to unbelievable heights, so huge volatility once the inevitable crash occurred was to be expected.

The tech stocks did not drive the latest bubble. They participated, but the recent bull market was driven by real estate and financie. Now, if you could put together a volatility index on the Financial or Real Estate indices, then I bet you’d see huge volatility that might make VXN look tame.

]]> by: pej http://www.tradersnarrative.com/the-heartbeat-of-the-stock-market-goes-thump-1909.html#comment-34948 Thu, 02 Oct 2008 17:08:01 +0000 http://www.tradersnarrative.com/the-heartbeat-of-the-stock-market-goes-thump-1909.html#comment-34948 The problem is that the vix data is only going back to the mid 1990's. No crash occurred since then. That's the reason I am not selling my puts, even though they are at historically high prices :-) The problem is that the vix data is only going back to the mid 1990’s. No crash occurred since then. That’s the reason I am not selling my puts, even though they are at historically high prices :-)

]]> by: Holly http://www.tradersnarrative.com/the-heartbeat-of-the-stock-market-goes-thump-1909.html#comment-34947 Thu, 02 Oct 2008 14:42:06 +0000 http://www.tradersnarrative.com/the-heartbeat-of-the-stock-market-goes-thump-1909.html#comment-34947 It's obvious that this restriction on short selling DIDn't work--look what happened on Monday; however, it DID interfere the normal market operation, eg. put/call and VIX....so data may not reflect the truth. It’s obvious that this restriction on short selling DIDn’t work–look what happened on Monday; however, it DID interfere the normal market operation, eg. put/call and VIX….so data may not reflect the truth.

]]> by: RA http://www.tradersnarrative.com/the-heartbeat-of-the-stock-market-goes-thump-1909.html#comment-34945 Thu, 02 Oct 2008 12:46:59 +0000 http://www.tradersnarrative.com/the-heartbeat-of-the-stock-market-goes-thump-1909.html#comment-34945 Perhaps the restriction on short-selling is pushing up demand for options, and pushing up the VIX (artificially) Perhaps the restriction on short-selling is pushing up demand for options, and pushing up the VIX (artificially)

]]>