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Archive for November, 2010
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November 28, 2010

Volatility Pinball

I just can’t seem to be able to get over my VIX chart which is now in the process of racking up a record amount of bonus points:

The 2.0 Bollinger band is increasingly turning into a pinball bounce zone as we see 20% drops followed by 20% ramps. Rapid swings like that can be extremely painful for option holders on the short and long side alike. The good news is that we are seeing a slight expansion of the band now and I expect the lower border to start creeping up slowly during December. After all – equity buy signals at VIX 22 does not really help the shorts, does it?

Something’s afoot here – chalk if up to pre-holiday tape but wild [...]

 
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November 27, 2010

Edward Bernays Day

In case you missed it – Friday was Edward Bernays Day, a.k.a. Black Friday.

If we understand the mechanism and motives of the group mind, it is now possible to control and regiment the masses according to our will without them knowing it. — Edward Bernays

The conscious and intelligent manipulation of the organized habits and opinions of the [public] is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. — Edward Bernays

Case in point.

You may want to bookmark this page (or the youtube clip directly) [...]

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November 24, 2010

Fractal Alert!

I don’t have terribly much to say tonight as this tape is bouncing around like a Mexican Jumping Beans and needs to finally pick a direction. Seems each day we gap down and then reverse at least some of the lost territory by the end of the day. Of course this type of monkey business can only go on so long.

I have been talking about the VIX a lot lately and there’s a reason to my insanity. One – we the pattern itself has been interesting in that we keep gyrating higher and then suddenly ‘reset’ to the downside. Clearly there’s a buyer at 22 and seller at 18 (relative to equities of course) – and at some point a winner will [...]

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November 21, 2010

Mixed Salad

Scanning through my momentum charts this weekend I see a pretty mixed salad – suggesting a continued low calorie diet for the bears. Some of my indicators claim it’s business as usual while others continue to show divergences pointing toward a possible correction looming in the not so distant future. But in summary I remain quite skeptical when it comes to the bearish case. The bulls are clearly leading the charge here.

I think the most stubbornly bullish chart is the VIX which suggest that complacency and faith in Bernanke’s put is at record highs:

For over six months now we have seen the bollinger band weave down and now our range has [...]

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