VIX-ing a Top in a Very Big Bear Market ~ The Risk Averse Alert

Wednesday, September 02, 2009

VIX-ing a Top in a Very Big Bear Market

For today's opener... just read yesterday's opener. Same slip, different day.

Supporting the possibility top is in, it appears, is the VIX...


The derivatives (RSI and MACD) of the derivative (VIX) potentially are signaling the post-March '09 trend's imminent reversal, transitioning into their respective ranges' "increased volatility" side. Likewise, VIX's divergence as major stock indexes set new, post-March '09 highs late-August ... as well as its curious launch over the past few days ... make these prospective RSI and MACD transition signals all the more "alarming."

And on a top, of course, goes icing, which is VIX's long-term, rising trend presently being met.

One piece of evidence supporting a "top is in" thesis.

Making this VIX analysis compelling to me, however, is its confirming an Elliott Wave-related view supposing the market's rally off March '09 bottom is but a counter-trend rally in a very big bear market.

Again, I'll defer back a couple days ago when I claimed last year's thumping was not contrived. Instead, its basis in fear was over an incalculable risk spiraling out of control. Last year's extraordinary VIX readings say it all. Since this fear was credible (coinciding with incredible, measured reactions), it cannot be ignored, meaning yesterday's fear could, in fact, turn to panic.

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Hard said...

We all get bombarded every day with mails, morning briefs as to which stock we should pick and how will be the market trend today. Every time the brokerage houses will send the stock market tips as if we all are playing a gamble and need the tricks as to how we can win it. And anticipating as to how to do stop loss and at least will make smaller profits. What most of the investor do is they consider short term trading as the long term investment and believe as to how it can be doubled in a day. Buying a stock just because the price is low and some stock market tip you received that this will boom in the market today. What most of us do is that we all trade with money which we can’t afford to lose but the market always says that invest only that money which is in excess to you. All of these are the big mistakes which we commit every day in spite of being reminded every time that we should complete our home work for the next day.
Things to Remember when invest in stock market:
 We believe that the fundamental says invest in those company about which you know completely , but that doesn’t mean you fall in love with a company and a particular stock just because you are familiar with it or it create news in the stock market every time. Most of us just try proving our fundamentals are right and for that we apply too many technical indicators on that stock. It’s not true that the stock will go according to its fundamentals and technical, many stocks behave opposite to their indicators, thus they do not guarantee as to whether it will go up or down.
 Investors jump to penny stocks as they immediately boom in the market due to rumors what need to understand is that the Penny stocks are very risky , and on this basis make your strategy as to which one to pick from that lot and how much to invest . The portfolio of the investor should be constructed in such a manner that it allots weight age to different sector and the sizes of the stocks so that the diversification is there and the risk can be mitigated. Therefore the weight age of penny stocks in one‘s portfolio should not be more that the 15%. This is to minimize the losses and to accumulate the profits also.
 Keep a watch on the industry of the particular stock. Most of the stock behaves according to their industry trend. Thus if in the budget the government committed to play large role in the infrastructure sector , all the stocks will go react as per the budget and the whole sector recorded the jump of 12% on the next day. But it might be the case that the industry is booming and the stock is going down, therefore along with Industry, Company information is also vital.
 Past performance of any company doesn’t not hold true or affect its future performance. Many of the Indian stocks which were heavy weight in the past few years and were considered the blue chip companies in this market are either bankrupt or have become extinct in the market. Thus continuous performance analysis and evaluation is important.