Those 20% in Gold to Prove No One Makes a Dime Panicking? ~ The Risk Averse Alert

Monday, September 22, 2008

Those 20% in Gold to Prove No One Makes a Dime Panicking?

You may have noticed I added a link to CNBC's Fast Money at the bottom of each day's post. I often find the traders' comments instructive. I thought you might, too.

Tonight, Pete Najarian presented an interesting historical observation of the VIX (chart appearing in Friday's post). He indicated when the VIX remains above 30 (which, of course, it did again today), you typically can expect big swings in the market over coming days.

I'll embed the clip here today if you care to watch the entire segment...

Fast Money

Of course, I mention Pete Najarian's VIX intell because it fits the view I maintain at present. Big swings in both directions — essentially trading sideways — would satisfy my outlook. This week could be a lot like last week, with its fair share of excitement and a market going nowhere ... only in a narrower range.

I am more confident, too, last Thursday (9.18.08) might be bottom to a nice bounce with a good bit further to go. Shemp has his crew selling 20% of their stock portfolio and getting into gold. What a panic.

I will give you this... today's surge in crude oil was a real hyper-inflationary eye-opener ... not only a harbinger of financial crisis, but social crisis as well. I understand this potential has little regard for elections, too. In fact, some, I'm sure, would just assume they be canceled. So, watch Senator Clinton. If she goes down, then listen to Cramer.


Today's contraction in volume is an encouraging sign. It indicates selling exhaustion, suggesting last week's capitulation was the real deal ... at least for the present moment.

One other thing worth noting is OEX open interest. For the first time in I don't know how many months Put open interest exceeds Call open interest at the start of the new front contract (Oct '08). I take this to mean strong-hand longs in the underlying (i.e. stocks in the S&P 100) are adequately hedged. This is bullish.

OEX 5-min

The question, I think, is how soon might the market burst higher, taking the likes of the S&P 100 to its 200-day moving average and possibly through it?

I'd like to see a price-RSI divergence first ... like happened last week when the index bottomed. This, of course, is neither necessary nor essential. However, it would help confirm both last week's bottom and raise the possibility a further rise is imminent.

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