Volatility Index $VIX hits another new high

Price swings are all over the place so far. Volatility hits another new high. Just about all sectors are getting hit.

Volatility hits a new high

The VIX has achieved another new high.

Market Update

As I said this morning I expected the volatility index to set a new 52wk high. That has already happened and is now at the highest point in in 4 years.

Volatility Index $VIX

The volatility index is at the highest point for all of 2007.

VIX on the way up again

The volatility index is once again showing what we already know. The market is a mess today.

VIX is soaring again

This is a wild day. As soon as we get close to the top of our trading ranges the big money keeps taking their chips and walking away. This is getting frustrating! The volatility (VIX) index is spiking once again now.

Intraday VIX chart

As stated a short while ago the volatility has been a problem today. The chart shows the rise in volatility so far today.

Market update

Market volatility (VIX) is increasing this morning and has us once again in a bearish stance. Up and down, up and down, and up and down we go within this trading range. This see saw action is getting tiring.

At 10 am US east coast time the E.I.A. energy statistics were released and they were bearish for the energy sector. Oil fell back some and some of the energy sector stocks are taking some punishment this morning.

AMX is doing super here and is soaring on good volume. Were up almost 5% from my original buy point just a few days ago.

AKS is consolidating around the original buy point. Still bullish on this metal sector play.

BIG has pulled back but still remains above the original buy point of $29.20. Some consolidation taking place but still seeing some large uptick trades going through so other people are also playing BIG for a move up soon.

WDC posting gains this morning and holding up well in the market volatility so far.

Made the call...

Yesterday I was not liking how the market was looking early on in the day. Too many trades were going through that gave me the feeling that some big money was quietly looking for the exit.

I sold my open positions yesterday and locked in the gains up to that point. I did not want to see them evaporate in what was shaping up to look like a trap for the bulls. Even though the market ended the day yesterday up it still looked like a trap. And today that feeling of a trap was evidently true. The bears came out of hiding right as the market opened and ran off with the bulls lunch (money)!



This morning I said as the market opened that today was a day to stay out of the markets. That the volatility would spike today. And it did. So what is this volatility (which we measure by charting the symbol VIX)?

Volatility is the measure of the tendency of a market or security to rise or fall sharply within a short period of time. It is typically measured by the standard deviation of the return of an investment. Standard deviation is a statistical concept that denotes the amount of variation or deviation that might be expected. So what is this VIX thing?

The VIX is a measure of the volatility of options prices on the Chicago Board Options Exchange (CBOE). The VIX, even though is a measure of options pricing has become a popular gauge for the overall markets' volatility. And we can use it to give us a visual presentation of just how volatile a market is. In general when the VIX goes up then the markets are more likely to have wild price swings.. or even a downright sell-off. When the VIX is low the market is considered 'safe' and investors are more prone to enter a trade when they feel it is safe.

Think of VIX as an earthquake Richter scale. When it goes up then everything starts shaking, and crashing down! When the VIX is low everything is safe and stable.

As an example. If you were to apply the formula that makes up the VIX to your certificate of deposit at your local bank which offers a fixed rate of return you know what the volatility measurement would be? Zero of course. If you have a rate which is locked and can not change then there is no deviation and subsequently a zero volatility.

There are three variations of the volatility indicators

• VIX tracks the volatility of options within the S&P 500


• VXN is for the Nasdaq 100


• VXD is for the Dow Jones Industrial Average

But the VIX has become the most popular for traders to gauge the overall market volatility. The chart below shows the relationship between the VIX and the S&P 500 SPX

Notice on the chart that the S&P 500 index (red) takes a dive when the volatility (blue) spikes. Day traders love a little volatility in their coffee each day. But for us swing traders and position traders too much volatility can play havoc with our setups. So the smart thing for us to do is to wait out the storm. When the market settles down then we make our moves. And when an earthquake hits we duck and cover and hold our chips close!

Fp80