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Posts Tagged ‘$vix.x’

V day

V is for volatility.

The $vix.x hit 40+ and the market reversed from just over +100 points for the week. We have been expecting a violent reversal, and only liars or the extremely talented know exactly where and when it will come.

The V bounce gave a few clues but guessing against the trend is just that: guessing. If you have been prudently selling rallies, then if you took an attempt or two at logical resistance, that is all that was required.

The profits playing the trend the past few weeks on the short side more than compensate for any few small losses you endured today. If you played according to the plan, it was an exceptional day with serious profits.

The smart traders walked away after a great morning and let the market sort itself out. The really smart traders hit the reverse button after they realized the afternoon breakout was taking hold.

V bounces are mysterious creatures that occcur so infrequently that they trap the unsuspecting who average in and lose everything in one bad day.

News reversals are an important part of trading; the government must do all it can do right now to prop up the market or the house of cards collapses.

The “Too big to fail” concept evidently applies to AIG but not to Lehman.

A few cheap options on either side is another way to hedge a schizophrenic market like this one that is searching for a bottom. The other aternative is to stand aside until the market becomes more normal.

Secret code traders had no problem today understanding the rhythm.

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