CBOE VOLATILITY INDEX (^VIX)

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while all the rest of the index is at on the low. this is at one of the highest point..


via : http://finance.yahoo.com/q/bc?s=^VIX&t=my&l=on&z=m&q=l&c=

read it from : http://www.bmw-sg.com/forums/lounge/27772-financial-market-updates-6.html

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http://www.askchrishow.com/investing-in-precious-metals/volatility-in-the-markets/

Dear readers,

In recent months, we have seen huge moves of the volatile market in these troubled times. Even commodities such as gold which is considered defensive, have been moving in difference of US$20-50 in many occasions.

The question in the minds of most investors are, how is this crisis going to fare as compared to the previous crash and depression.

Looking at the chart below published by The New York Times, it appears that we are definitely in for a hell-of-a-ride here.

The current financial crisis makes the ‘87 crash look like child’s play.

My opinion is to stay calm by the sidelines and wait. Potentially, I’m seeing more negative downside coming our way before the actual recovery which requires drastic change.

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http://finance.yahoo.com/q/bc?s=^VIX&t=5y&l=on&z=m&q=l&c=

index Value:   45.89
Trade Time:   4:14PM ET
Change:   Up 2.21 (5.06%)
Prev Close:   43.68
Open:   43.60
Day's Range:   43.07 - 47.63
52wk Range:   15.82 - 89.53

comparing to the DOW. it can be inferred as inversely related. (past 6 months.)


via : http://finance.yahoo.com/q/bc?s=^VIX&t=6m&l=on&z=m&q=l&c=^DJI

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VIX Drop Is a Bad Sign for Stocks, BGC Says: Technical Analysis
2009-04-16

By Elizabeth Stanton
    April 16 (Bloomberg) -- The benchmark index of anxiety
among U.S. stock investors has fallen to a level from which it’s
likely to rebound, probably in tandem with a retreat in the
Standard & Poor’s 500 Index, according to BGC Partners.
    The VIX, as the Chicago Board Options Exchange Volatility
Index is known, slumped 1.1 percent to 35.79 today, the lowest
close since Sept. 26. The index measures the cost of using
options as insurance against declines in the S&P 500, which
gained 1.6 percent.
    The VIX is “low enough to warrant some caution,” said
Roger Volz, a director of equities at BGC in New York. “In
these types of markets, I would rather be early putting on some
hedges than a day or two late.”
    The VIX, which investors can bet on using futures, options
and exchange-traded funds, extended its decline from a record
80.86 on Nov. 20 to 56 percent. It has dropped on all but four
of the past 18 trading sessions.
    The relative strength index for the past 13 days, a measure
of momentum, decreased to 35.5, the lowest since January. RSI
readings under 30 suggest a given index is poised to rebound.
    Volz uses a set of four VIX indicators that together show
the measure is as “oversold” as it was in May 2008, when it
slumped to 16.3, its low for the year, and in November 2006,
when it sank below 10.
    “It suggests complacency is starting to set in,” he said.
“There’s not any pricing for any negative surprise at this
point.”

via : http://forums.hardwarezone.com.sg/showthread.php?t=2335092&page=49

[cepheus]

a lot of ppl got hit by relying on thie VIX in recent years.

Before thinking of which strategy to use, it is good to read Nassim Taleb's Fooled by randomness book

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end of the day it's just a proxy indicator.

=============


http://www.fooledbyrandomness.com/


http://www.amazon.com/reader/1587990717?_encoding=UTF8&ref_=sib_dp_pt#reader

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20 April 2009
VIX and VXN indicates lower implied volatility ahead, supporting the expectation of more upside for US stocks.  However, the top of this stock market rally may not be that far away

via : http://forums.hardwarezone.com.sg/showthread.php?t=2094269&page=18

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VIX, Currency Options Signal Rally May End: Technical Analysis
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By Jeff Kearns and Oliver Biggadike

June 4 (Bloomberg) -- Options on stocks and currencies show “strong warning signals” that the recent rally for both may be poised to end, Citigroup Inc. said.

The VIX, which tracks the cost of using options as insurance against declines in the Standard & Poor’s 500 Index, has risen even as equities trade near seven-month highs, according to New York-based Citigroup. Currency options show traders betting on wider exchange-rate swings, indicating investors may shift away from the higher-yielding assets that benefited from signs of an economic recovery, the bank said.

“We are seeing a disconnect between what’s happening on implied volatility and underlying price action across a host of markets,” Citigroup chief technical analyst Tom Fitzpatrick in New York and strategist Shyam Devani in London wrote yesterday. “It suggests to us a real danger that a good consolidation/ correction to a lot of recent trends may be near.”

The S&P 500 closed at a seven-month high of 944.74 on June 2 and slipped to 931.76 yesterday. The gauge has recouped 38 percent since March 9 on speculation $12.8 trillion pledged by the government and Federal Reserve will help end the recession. The VIX, a gauge of expected swings over the next 30 days, is up 7.7 percent at 31.02 from its eight-month low on May 19. The measure hasn’t closed above 34.50 since May 4.

The VIX, as the Chicago Board Options Exchange Volatility Index is known, may re-test the 34.50 level from a month ago, which would suggest “danger of a pullback” for the S&P 500, Citigroup said.

‘Complacency’

The Australian dollar closed below a threshold against the yen that Citigroup said “would suggest the danger of a squeeze lower.” The Australian dollar fell 2.2 percent yesterday to 76.86 yen, below the key level the analysts identified at 77.53.

“Our fear is that complacency is back in the market and the low volatility has fueled a lot of these moves,” the strategists wrote. “This pick-up in volatility seems to be warning that nothing is one-way forever and when you start to believe that it is when you get hurt.”

Three-month implied volatility on euro-dollar options, a measure of risk in foreign-exchange investments, rose for a fifth day to 16 percent on June 3, the highest in eight weeks. The dollar rallied against the European currency in December and March after “sharp bounces” in volatility, Citigroup said.

The 30-day correlation coefficient between euro-dollar and the MSCI World Index peaked in November at 0.737 as the benchmark gauge for global stocks fell to a five-year low, data compiled by Bloomberg show. The correlation weakened as stocks rose at the end of the year, only to reassert itself in February and March as the MSCI dropped to the lowest since 1995.

A correlation of 1 would mean the euro and the stock index moved in lockstep.

Options give the right though not the obligation to buy or sell a security at a set price and date. Investors use options to guard against fluctuations in the price of securities they own, speculate on share-price moves or bet that volatility, or stock swings, will increase or decrease.

To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net; Oliver Biggadike in New York at obiggadike@bloomberg.net

Last Updated: June 4, 2009 09:05 EDT

via : http://forum.channelnewsasia.com/viewtopic.php?t=252586

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looking at the ^VIX numbers. for the past year it looks like it's on a downward trend. (visually)

that would also means it's due for a "upswing". looking at all the charts, things always move in a zigzag line.
however, that might be another 6-12 months away. looking at how productions are moving right now, it would take a while before it would slow down.

perhaps a comment mentioned by one friend would hold true. "if you wan to know how the economy is doing, just look into the electronics sectors." he was talking about the workers that was being hired n working.

some questions pops up though. what kind of wages are they drawing? how many hours? for how long is the new contracts?

as far as i know, it's a lessor wage, shorter hours, n the contracts  are usually short to mid term. unlike in the past where is 2-3 years, this time round it's 3-12 months top.

employment figures only gives an indicative figure, what goes on behind matters as well. the former works on the short term, the later works on the long term.

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VIX Signals S&P 500 Swoon as September Approaches (Update4)
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By Jeff Kearns and Michael Tsang

Aug. 10 (Bloomberg) -- Options traders are increasing bets that the steepest rally in the Standard & Poor’s 500 Index since the 1930s won’t survive September, historically the worst month for U.S. equities.

Traders were betting the VIX, a gauge of expected stock swings, would increase 13 percent in the next five weeks, according to futures prices at the end of last week compiled by Bloomberg. That’s the biggest spread since August 2008, before the S&P 500 suffered the steepest two-month plunge in 21 years. The indexes have moved in the opposite direction 81 percent of the time over the past five years, Bloomberg data show.

VIX futures above the level of the index show investors expect fluctuations to widen and stocks to retreat. The S&P 500 has rallied 49 percent in five months, pushing valuations to the highest levels since December 2004. The S&P 500 gained 2.3 percent last week as reports showed home sales rose and the unemployment rate fell.

“It’s a danger sign,” said Ronald Egalka, a 36-year options trader who oversees $8 billion as chief executive officer of Rampart Investment Management in Boston. “People expect volatility to pick up in the future, and that implies that there’s going to be a downward movement in the market.”

History shows that U.S. investors lose the most in September. The benchmark index for American equities fell 1.3 percent on average since 1928 that month, data compiled by Bloomberg show.

30% Slump

The S&P 500 lost 0.3 percent to 1,007.10 at 4 p.m. in New York. Mark Mobius said global stocks will drop as much as 30 percent following their recovery from last year’s rout as companies take advantage of the rebound to sell more shares.

“When you have these rapid increases almost without correction, you will definitely have a correction,” Mobius, who oversees about $25 billion as executive chairman of Templeton Asset Management Ltd., said in an interview in Kuala Lumpur today. “We can expect a lot of volatility.”

The S&P 500 plunged 9.1 percent last September after New York-based Lehman Brothers Holdings Inc. collapsed. The biggest drop occurred in September 1931 during the Great Depression, when the S&P 500 tumbled 30 percent. February is the only other month when stocks fell on average since 1928, losing 0.3 percent, Bloomberg data show.

Buying Insurance

The VIX, as the Chicago Board Options Exchange Volatility Index is known, usually moves in the opposite direction of the S&P 500 because demand for insurance rises as stocks fall. VIX futures expiring in September were 3.29 points higher than the index on Aug. 7, and last month were as much as 5.91 points higher, a record gap for so-called second-month contracts. Last week’s spread was comparable to the one in August 2008.

The VIX added 0.9 percent to 24.99 today, while the September futures contract was unchanged at 28.05.

The index has averaged 20.22 over its 19-year history and surpassed 50 for the first time in October after Lehman filed for the biggest U.S. bankruptcy. Frozen credit markets and bank losses approaching $1 trillion tied to subprime loans pushed the measure to a record 89.53 on Oct. 24. Losses at the world’s biggest financial companies now exceed $1.5 trillion, according to Bloomberg data.

Last week’s reading indicated a 68 percent likelihood the S&P 500 would fluctuate as much as 7.2 percent in the next 30 days, according to data compiled by Bloomberg.

‘Break in the Market’

“VIX futures are telling you that investors are willing to pay a premium for protection,” said David Palmer, who helps oversee $300 million as volatility portfolio manager at Hudson Bay Capital Management LLC, a New York-based hedge fund that returned 11 percent last year, according to Absolute Return magazine. “People expect some sort of a break in the market.”

Hedge funds lost an average 18.3 percent in 2008, according to Chicago-based Hedge Fund Research Inc. The S&P 500 declined 38 percent, the worst performance since 1937.

Options strategists saw the same upward-sloping curve last August, before the S&P 500 tumbled 9.1 percent in September and 17 percent in October. VIX futures two months from expiration were 4.11 points higher than the VIX on Aug. 22, when the index slumped to an 11-week low of 18.81.

Volatility may be increasing for reasons unrelated to stock prices, according to Macro Risk Advisors LLC, a New York-based options brokerage. Traders who sold bullish options when the rally began on expectations the gain would fizzle may be buying them back now, Dean Curnutt, the firm’s president, wrote in a note. That demand could be artificially boosting the VIX.

Beating Estimates

U.S. companies are also beating analysts’ earnings estimates at an almost record rate, making investors more bullish, according to Rob Morgan, who helps oversee $6 billion as market strategist at Clermont Wealth Strategies in Lancaster, Pennsylvania.

For the second quarter, 72.2 percent of S&P 500 companies surpassed consensus estimates for profit, just below the 72.3 percent ratio five years ago that was the highest since at least 1993, data compiled by Bloomberg show.

Investors still hold more than $3.6 trillion of their assets in money-market funds, equal to about 30 percent of the total market capitalization of U.S. companies, according to data compiled by the Washington-based Investment Company Institute and Bloomberg. That’s double the percentage when the S&P 500 reached its all-time high in October 2007, the data show.

Home Sales, Unemployment

The number of contracts to buy previously owned homes in the U.S. rose 3.6 percent in June, the fifth straight monthly increase and more than economists estimated, as lower prices and mortgage rates lured buyers, the National Association of Realtors said Aug. 4. The unemployment rate fell for the first time in more than a year, dipping to 9.4 percent from a 26-year high of 9.5 percent, the Labor Department said Aug. 7.

“There’s a good underpinning to the market here, and the VIX is just one tool in the toolbox,” Morgan said. “Stocks follow earnings and revisions are going up and you also have a boatload of cash still sitting on the sidelines as the economy is turning.”

The S&P 500 will keep rallying this year as exports to expanding Asian economies help U.S. companies boost profits, David Bianco, the chief U.S. equity strategist at Bank of America Corp., wrote in a report today.

Bianco said S&P 500 companies will earn $59 a share this year, tying him with Credit Suisse Group AG’s Andrew Garthwaite for the highest estimate among 11 strategists that Bloomberg tracks who have 2009 profit projections. Bianco is based in New York, while Garthwaite is in London.

‘Pause in September’

Paul Tudor Jones, the hedge fund manager whose $8.9 billion Tudor BVI fund gained 10 percent this year through July, said he expects that global stocks may “pause in September” on slower Chinese economic growth. The advance since March is a “bear- market rally,” Jones wrote in a report to clients last week. “We are not inclined to aggressively chase the market here.”

The S&P 500 traded for 18.6 times its companies’ average earnings this year at the end of last week, the highest since December 2004, according to data compiled by Bloomberg.

The first global recession since World War II may worsen as more Americans get thrown out of work and the benefits of government spending wear off, according to Martin Feldstein of Harvard University.

“There is a real danger this is going to be a double dip and that after six months or so we’ll have some more bad news,” Feldstein, the former head of the National Bureau of Economic Research, said on Bloomberg Television last month. “We could slide down again in the fourth quarter.”

Better Than Estimated

The U.S. economy contracted at a 1 percent annual pace in the second quarter, less than economists forecast, as government spending increased the most since 2003. The outlays, part of President Barack Obama’s $787 billion stimulus package approved in February, masked a 1.2 percent drop in consumer spending, which accounts for more than two-thirds of the economy.

Almost half of U.S. homeowners with a mortgage are likely to owe more than their properties are worth before the housing recession ends, Karen Weaver and Ying Shen, New York-based analysts at Deutsche Bank AG, wrote in a report dated Aug. 5.

The percentage of “underwater” loans may rise to 48 percent, or 25 million homes, as prices drop through the first quarter of 2011, according to Frankfurt-based Deutsche Bank. As of March 31, the share of homes mortgaged for more than their value was 26 percent, or about 14 million properties.

61% Surge in Profit

Profit for companies in the S&P 500 will fall 22 percent this quarter before an earnings rebound by financial institutions spurs a 61 percent increase in the last three months of the year, according to analysts’ estimates. Excluding banks, brokerages and insurance companies, profits are projected to drop 8.6 percent in the fourth quarter.

U.S. stock trading has also slowed by the most in at least two decades. An average of 1.34 billion shares changed hands daily on the New York Stock Exchange between May 1 and Aug. 7, about 16 percent less than the average from Jan. 1 to April 30. That’s the biggest drop since at least 1989, according to data compiled by Harrison, New York-based research firm Bespoke Investment Group LLC.

“There’s always a real risk that a rally is going to be tested,” said Stephen Wood, New York-based chief market strategist for North America at Russell Investments, which had $151.8 billion in assets under management as of June 30. “Investors are thinking that giving up some upside to hedge the downside is a very reasonable investment profile.”

To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net; Michael Tsang in New York at mtsang1@bloomberg.net.
Last Updated: August 10, 2009 11:23 EDT

via : http://www.bloomberg.com/apps/news?pid=20601087&sid=aV6OGPHTAuH8

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http://www.bloomberg.com/apps/cbuilder?ticker1=VIX%3AIND

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notice an almost double digit bandwidth on a weekly basis.

volatility swing in action once again?

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as with the dip on the street. vix on a double digit blip.

if i'm reading it correctly, this is just about the time when these numbers will slowly creep back up from the long declining slope.

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*check out those double digit percentage dips n blips. (close to 20%, and over in some instances)

super, if it's going to be like that for some time to come. we all will be in for a ride.

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I don't think this corrective wave up will finish before VIX goes below 25 and FTSE goes above 5300 (probably 5400).

So think STI can hit 2900 or around there.





Generally, daily stock market charts are all still pointing up and has a bit of upside room.

The currencies against USD are also following the same pattern as the stock market because the forces currently driving the stock market are the same ones as those making the waves in the currency market.

For e.g. the Australian Dollar.  (and of course also the Euro) is still pointing up on a short term basis although longer term on weekly chart is now down trend.



Some people are bullish because the weekly technical indicators are turning up.

However, weekly indicators pointing up does not change the longer term down trend until certain reversal patterns emerge.

Some are uncertain because the weekly technical indicators crossing over to up is bullish but the pattern of the weekly chart is bearish.

For my system, the longer term trend is certainly down and another bigger down wave for the stock market is expected after this corrective wave up is finished.

The daily and weekly charts are both pointing up now but my systems says both the daily and weekly TRENDs are both down.

So once this corrective wave up is done, both the daily and weekly charts will be pointing down coupled with the daily and weekly down TREND will produce the next bigger wave down.

via : http://forums.hardwarezone.com.sg/showthread.php?t=2782873&page=54