If you had asked any chartist what it meant when the VIX topped 40 he/she would have said - panic in the market and probably a washout event had just occurred.
Now ask him/her what it means today when the VIX spends five straight days over 40 (give or take a dime) and you might get a different response. Armageddon? or the Mother of all Bottoms? (For the guys - a J Lo)
Let's look at this from the contrarian point of view. The bailout plan was turned down by the house a week ago and the economy did not crash. Stocks tanked but reversed the next day.
Then the bill was passed by the Senate a few days later and stocks fell. The House passed the new version and the market fell again.
No matter what happens, stocks go down. Given that the economy is still standing, the market is telling us that the bailout bill stinks. Shouldn't a rescue be met with cheer?
As John Belushi would say, "but nooooooooooooo"
The market is panicking without it showing up in the indicators. I don't think I want to own stocks when the next bit of bad news hits. And I don't mean the latest jobs report, which really was not surprise at all.
Citi failing? A major regional failing to tap the FDIC for a few bil?
How about Treasury Secretary Pat Paulson (any Laugh-In fans out there?) saying that 700 billion was a little off the mark and hereally needs a tril? A trillion! Hhumans really have no concept of just how big that number is.
2 comments:
Today was a very bad close. The miracle bill, the "preventer" of the next depression as it was touted, failed to produce. From up 300 to down 157, closing on the low of the day and the week. Not good.
I am not going to tell which Friday this reminds me of. What I will say is they had better pull a rabbit out somewhere by Monday morning.
The only positive might be that we are already down almost 30% so a possible gap and go might be less than heart stopping.
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