Wedged In

I just took a peek at the DJI, which has been the average of choice for not only leading this advance but also for dropping volatilty, thus handing the bears another death blow:

Seems to me that the moment of truth should be near. Either the bulls can push this thing above 10,500 and beyond, thus breaching this wedge, or we will fail the long term support line which has been supporting this bear market rally since early March.

Cake or Death?

2:46pm EDT: If you are wondering why your puts or calls are not banking the coin you hoped, here’s what you should be looking at:

I must say that this is nothing but astounding. Our economy is teetering at the bring of destruction and the current risk in the system is dropping into super bullish territory (i.e. 20). Anyway, for the noobs – volatility affects your option premiums (puts and calls equally) and its measure is ‘vega’ – one of the option ‘greeks’. A drop in volatility lowers the premium of both calls and puts alike – and judging by the expanded BB on the chart there is a chance we might slip into teenage readings before it’s all over.

3:17pm EDT: Final ramp up hour is nigh – however, what’s interesting is that we are dropping VIX by over 3% on a day where three out of four averages is down!

I’m neither bearish or bullish at this point – just confused. Nah – not really – it’s obviously another coffin nail in the collective sarcophagus of the bears, although as I pointed out in the comment section, this will affect call holders as well.

This entry was posted on Tuesday, November 24th, 2009 at 12:42 pm and is filed under Market Outlook. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.