Hi Friends. I am still working and did not have much time for the market. But I guess nothing much happened anyway. It seems no body wants to sell and VIX is down below 14. My short positions are bleeding red but my position is small and the pain is bearable. Some of you asked about VIX and whether it has bottomed yet. I have the right post for you. Bill Luby is a very smart guy who writes only on VIX. He is a consultant for CBOE and he is long VIX at this time.
http://vixandmore.blogspot.ca/2012/08/how-can-vix-be-14-and-lower-than-vin.html
I see many smart guys are bullish and buying in equities. May be I am dumb to doubt the rally but I still think time is not right yet for going long. I think this is a hope rally where everyone is waiting for Central bank liquidity injection. I think the markets will reach the highs of 2007 by the end of the year but it is still little early for that and we need one correction before the final upswing. And that time is awfully close as per my calculation. So I am not really worried that VIX is down along with SPX. It does not really matter if the SPX goes up a bit tomorrow or day after because the bigger trend is that of a trap. At least that is what I think.
The market action is grinding folks and forcing them to take positions which are risky.
My advice, just don't do anything silly and wait. It is not going to hurt to wait for a definite break out or breakdown.
If you are long, keep your stop loss limits tight. If you are short, keep a close watch and decide when you should cut your losses. Because, despite all indicators, market can remain irrational longer than we can anticipate.
That's it for today. I will have to get back to work. I will try to update with interesting stuff but for now I see just a grind.
Thanks for sharing my thoughts. GLTA.
http://vixandmore.blogspot.ca/2012/08/how-can-vix-be-14-and-lower-than-vin.html
I see many smart guys are bullish and buying in equities. May be I am dumb to doubt the rally but I still think time is not right yet for going long. I think this is a hope rally where everyone is waiting for Central bank liquidity injection. I think the markets will reach the highs of 2007 by the end of the year but it is still little early for that and we need one correction before the final upswing. And that time is awfully close as per my calculation. So I am not really worried that VIX is down along with SPX. It does not really matter if the SPX goes up a bit tomorrow or day after because the bigger trend is that of a trap. At least that is what I think.
The market action is grinding folks and forcing them to take positions which are risky.
My advice, just don't do anything silly and wait. It is not going to hurt to wait for a definite break out or breakdown.
If you are long, keep your stop loss limits tight. If you are short, keep a close watch and decide when you should cut your losses. Because, despite all indicators, market can remain irrational longer than we can anticipate.
That's it for today. I will have to get back to work. I will try to update with interesting stuff but for now I see just a grind.
Thanks for sharing my thoughts. GLTA.
very interesting link - thanks!
ReplyDeleteWhether the vix has bottomed yet or not, we haven't seen rallies take off from such a level of complacency in the markets. Waiting
ReplyDeleteMakes sense. I see AUD much lower in comparison and it seems equities are being held high artificially.
DeleteThanks for the mention re the VIX article. Just a point of clarification, I am not a consultant to the CBOE, nor do I have any relationship with them, other than I have elected to have them advertise on VIX and More.
ReplyDeleteFor those who are relatively new to the VIX, the options and exchange-traded products (VXX, UVXY, etc.) are particularly tricky to play from the long side. Your guidance to sit and wait for more evidence of weakness makes a lot of sense. Like you, my short equities (and long VIX) positions are small.
If there is a breakdown, there should be ample time to get short and ride that move after it is already underway. Like many, I find that trying to catch the exact top is usually an expensive undertaking.
One of the key takeaways from the post you linked is that the VIX is artificially low right now, due to a calculation quirk. It will be very difficult for it to go lower in the coming week or two.
Cheers,
-Bill
Sorry for the wrong information Bill. Appreciate you correcting it.
DeleteBB - just one observation here - back in the January timeframe we shorted waiting for a correction, yet the trend was 'up'. I'm starting to get a similar feeling now. What makes this time different such that we are willing to go against the trend? Is the relatively small position an indication of that?
ReplyDeleteI actually jumped the gun ans shorted before the cycle top. Let us see how far it goes. Their idea is to convert everyone a believer and then sink the boat. I do not think it is like Jan-Feb. Just look at AUD.
ReplyDeleteYes, feels the same as during the Januar run - with the difference that at that time we had a reason to go up due to LTRO liquidity. Right now it seems to be just driven by hope - unless there's a new source for liquidity currently flooding the markets which we don't know of - could that be the case?
ReplyDelete