Monday, April 12, 2010

VIX plumbs new low as other indicators edge closer to extremes

The volatility index ($VIX) dropped to another new low on its series of waves down since late 2008/early 2009, meaning that investors shed yet more fear to place yet less value on premium protecting against volatility. I could almost draw a new down trendline that price almost touched today. Below the VIX daily is a VIX weekly chart that also shows this substantial drop. This places it at risk of a snapback along with a stock market pullback. At the same time, other indicators (shown lower down) also tell the story of the market at the edge of cresting.


And here's the SentimenTrader gauge from http://www.sentimentrader.com/ - evidently there's some wave cresting for the bigger picture whether or not the near term is hot enough to set up a correction now:

INVESTOR SENTIMENT

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But we can see that the CPCE (put/call ratio) is at a very low level that typically tells traders to expect a sell-off soon. And the TRIN is at relatively overbought levels:

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