Market Currents
The apparent movement towards a deal has the VIX plunging 19%, one of its biggest single-day...
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Monday, December 31, 2012, 3:41 PM ETThe apparent movement towards a deal has the VIX plunging 19%, one of its biggest single-day implosions in years (and that's saying something). The "fear gauge" had made a big move higher since mid-December as traders bet on a D.C. agreement not being reached. Other big moves: August 2011, -27%, May 2010 -30%. VXX -10.1%.
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I think the only thing being accomplished here is the Senate gets to say, "See, we are the reasonable ones!". I think this just puts Boehner in an even worse position. The hardliner house members are concerned about being primaried, not losing their seat to a Democrat. They CANNOT budge.
This was a great day to realize year-end gains and losses.
So this is the best tool to make money. XIV also good tool ,too. But less volatility than uvxy.
SPX at this point in time @1426 Friday closed is about the highest it could get, last year high of 1475 could be the highest of this business cycle, monetary policy wise.
Starting 2013, there we shall have new fiscal policy which will challenge the current monetary policy, aiming maximum employment and lower inflation. With $16 trillion debt, there is going to have lots deep problem to deal with fiscally, global recession is in the order, and huge deflation globe wise will kick in sooner than any one could image, prices will drop like a rock big time.
For this very simple reason UVXY will do exceptionally well, except last Friday.
My best educational bet is that UVXY below $20.00 is a stealing buy. (do your own deligence though}
lONG TERM spx looks reached the top 30 years weekly chart,so does short term one year daily chart. UVXY long term chart looks bottomed out, short term looks very bullish. Friday 24.6% retraced to recent breakaway gap up neckline, technically speaking that $20.00 could be the low it could get.
We shall see the next few days what the price actions suggest, if spx break down that1400 support level, and UVXY hangs in above $20.00 we shall know the new bear market is in.
Also statistically VIX fear index hit below 14 indicates euphoria state, vix hit 13.30 tells us it is very much overbought, UVXY oversold, too much fear for uvxy.
This kind of divergence suggests UVXY below $16.00 be a buy.
Too euphoria is the prices are too high, UVXY too low.
Down trend of UVXY is near the end, soon up trend should be confirmed. Dec. UVXY displayed an uptrend but short lived. It is normal market intended to change from the down trend to uptrend, it does need a big clean out those who are so fearful and then uptrend confirmed. But if any one who are waiting this uptrend confirmation, they have to paid the higher prices in the end something like above $20/share breakout point for uvxy, so everything below $16.00 in the longer term will be the big winners. Buy low sell high every one makes money. Patience and consistency are the keys to battle this market.