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Intra-Day Update: Monster VIX
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Intra-Day Update: Monster VIX

by The MoleOctober 20, 2008

UPDATE 9:56am EDT: Now THAT is a high VIX!

The TOS data provider is having a teeny bit of a data problem today 😉

UPDATE 11:22am EDT: It seems the WSJ now buys into our (and other EW technican’s) count of this secular bear market. Note that they start the count at the 2000 peak. Wow – when did that happen? Are WSJ editors reading our blog? 😉

UPDATE 2:23pm EDT: I used the market rip to load up as the VIX was dropping a bit. Here’s what I’m holding right now: ACE, AMZN, BIDU, CCJ, CNI, FSLR, GILD, GOOG, MA, MON, NKE, POT, PX. Many of those suckers are way overbought – and I got 1/2 of them at the peak. Let’s see how the rest of today unfolds.

UPDATE Closing Bell: Man, that was weird – this rally was running on extremely little volume, but just kept chugging upwards. Almost feels like it had a schedule going – seems fake and driven by institutions. I kept on adding positions on the way up – I don’t buy this one for a second. In particular since the TNX ended on a black marabuzo – the smart money is flowing back into treasuries.


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • BigHouse Aka Mr Vix

    I wish. I am long Mr Vix

  • Paleface

    It's boring. Let's back to weekend trading!

  • molecool

    I knew you'd like that one.

  • BigHouse Aka Mr Vix

    Funny thing is the dow is up big and the qqqq's are negative.

  • molecool

    Berk and I grabbed GOOG, FSLR, CCJ, MA, POT. I also took AMZN. Yes, all puts.

  • molecool

    Which tells you what? 😉

  • BigHouse Aka Mr Vix

    We are going down baby. I shorted the QQQQQQQQ's. Lets get this VIX Up

  • BigHouse Aka Mr Vix

    amzn is annoucing earnings WED . Wonder if the bad news is already factored in

  • molecool

    It's a gamble – with some luck it'll drop below that old gap before Wednesday.

  • molecool

    That's a lot of cubes.

  • Growler

    “Are WSJ editors reading our blog? ”

    Nah, that would be indicative of thoughtful, prudent, transparent analysis. Why start now? : )

  • Apple Al

    Of course you realize that if the WSJ is on board, the case for further bear market is in trouble…

  • C.C. Rider

    Selloff to 1220 on a wedge break this afternoon. Just sayin.

    http://www.screencast.com/users/texana44/folder

  • C.C. Rider

    I do think the VIX needs to hold 61 here for our bearish case short term.

  • http://www.jon88keys.blogspot.com Buster

    Hey guys- I just wanted to tell you I think you're doing a terrific job. Super charts, and I'm not even an EW type.

  • humbledukes

    Looks like 59.82 is the line in the sand on my charts. If that breaks, I think we head higher for the interim. . . Time will tell.

  • Archangel

    I agree, and the chart above is one of the best 😉

  • C.C. Rider

    Looks like your right! Redrew my Fibs. I got 59.67.

    http://www.screencast.com/users/texana44/folder

  • Ukla the Mokk

    Front month or back? IV is sky high.

  • molecool

    Hehe, I wish my puts would have made some money at a VIX at 6500 – LOL

  • http://www.evilspeculator.com berkshire

    Give it to my resistance level of 57. That seems a little more reasonable.

    Skål!

  • BigHouse Aka Mr Vix

    Looks like the market might want to go up this afternoon

  • Archangel

    Let's see where the volume takes us…

  • http://www.for-really.blogspot.com Jana

    Imagine the volatility crush… like a fat woman on a Sit and Spin.

  • http://www.for-really.blogspot.com Jana

    57 is the new 35

  • gammatrader

    😮

    I've got the other side of your GOOG and FSLR puts. Short straddles here. IV was too juicy not to lay-into, but I'll probably chicken out and cover before eom.

  • BigHouse Aka Mr Vix

    The call options on the Vix are still strong even with the index down to 57.67. Your going to have to see a 1000 point rally to get the Vix calls way down.

  • molecool

    Tell me about it – options are insanely priced – best we can hope for is a little reprieve.

  • C C Rider

    I like your way of thinking, although I don't like the idea of retiring at 87!

  • Ukla the Mokk

    VIX is just a hair under $58 and MON had a nice reversal pattern on the 5m chart timeframe. The VIX almost touched its 38.2% retracement and MON was just rolling over from the high of the day. I was hoping to reenter my Qs trade, but I didn't see a pattern that I liked. The next best thing I could find out there was MON (although SPY is just bumping up against R1 resistance. Anyway…

    +1 Nov MON 80 put

    I can see it has continued higher so I may look for another opportunity to add. But I'm remaining cautious.

  • BigHouse Aka Mr Vix

    a trader was buying the Nov 75 calls on the VIX today. This large size is unusual outside of the front month.Oct Vix options expire Wed. This trader was paying up to 1.15 starting at .80 and driving the prices higher.The price is back down to .80. Look at the volume 29,834

  • molecool

    I can hear an echo in here lately. Is anyone still coming here?

  • molecool

    Volume is pretty thin today.

  • StoneDog

    yes. I come here hoping to find a little different commentary from the slope, but everyone is over there!

  • toad37

    yep, just thinking about my next move…. keep up the posts, they are very helpful.

  • C C Rider

    If your VIX 57 print holds, I'm going to nickname you, Sir Quant Berk!
    So far, the levels I was looking for haven't been breached, namely NDX 1350.

  • StoneDog

    Got back in ACE today, made a little coin on its last move down.

  • toad37

    I know, they are WAY expensive…. all the index puts are trading at huge premiums…

  • ProZachJ

    I'm here
    Just kinda bored

  • Ukla the Mokk

    Just watching MON with great fervor for the opportunity of adding to my position. :)

  • ProZachJ

    oh…and laughing at the return of the perma-bulls on cnbc

  • Archangel

    Sure. What to say – loosing my bearish faith due to lack of volume.

  • http://z-stock.blogspot.com/ zstock

    DIA, I have a great almost unbeatable, short sell signal at DIA = 92.5.
    So that VIX is just a hair form moving higher again.

  • toad37

    Berk and Mole,
    Does this sync with your thoughts?

    We continue to believe a major move is coming in stocks this week, starting around our phi mate turn date of October 23rd +/- a few days. Monday's rally does not change anything from our Weekend analysis, the triangle scenario remains in full effect. Today's rally looks to us to be the “{b}” wave inside the {d} wave forming for this triangle, and if so, 9,200 should prove to be formidable resistance, which is approximately where the upper boundary of the triangle passes. The 15 minute full stochastics argue that this move up should be over this afternoon, however the 30 minute Full Stochastics are indeterminate. If the triangle pattern is occurring, we should see a 300 to 400 point drop in the Industrials over the next day or two. That would complete the fourth leg of this five-legged triangle. Then we should get a short pop up, wave {e} up to finish the pattern probably Wednesday or Thursday. Then a massive decline should follow, the final decline for the first of thee major trends for this Bear Market from October 2007. A huge rally that lasts into early 2009 should then follow, before the last leg of the Bear Market occurs, which should be catastrophic. Of course things can change, but that's how things look at this time.

  • http://z-stock.blogspot.com/ zstock

    Why don't you guys search out the NOV delta 85's strikes? I've been doing great with those. It's the over the weekend ATM's that are getting crushed, and as they should get crushed.–EXample FRO up 5% ATM call down 15%, Deep in the money call up huge NOV 25 up $300 profit

  • molecool

    Mmmh – market moves up on super light volume. What does that tell you?

  • molecool

    It's not orthogonal to what we're thinking.

  • molecool

    Oh, it gets worse. I just watched some very experienced and respected traders explain why this triangle 'is different' and should not be seen as a continuation pattern. Whatever… slope of hope…

  • toad37

    say what? 😉

  • JanRosannadan

    I'm here, Mole. Holding on to my shorts……I'm 'asceerd!

  • Archangel

    It closes higher… Sustainable or not.

  • http://z-stock.blogspot.com/ zstock

    DIA reached my 92.5 short everything signal. I can't believe it.
    Closing out all my longs

  • molecool

    That's a nice sounding signal :-)

    Share some symbols leech-boy!

  • http://www.for-really.blogspot.com Jana

    There are more bottom grabbers today than Mole and CC at a booby bar.

  • molecool

    You obviously have seen me in action, Java :-)

  • Ukla the Mokk

    Nothing is “unbeatable” in this market, but I looked at DIA and MON produced a similar signal.  I now have 3 Nov MON 36 puts…I just kept buying because volume was light, prices were rising, and VIX was colliding with a 38.2% retracement level I had drawn from the most recent low earlier in the year to the high just a week ago-ish.
    So I “sold” (read: bought puts) into the rally at various “sell” candlestick/resistance signals, but I remain cautious. 
    By the way…DIA closed *one penny* under where I had the 61.8% fib retracement drawn in on a very long term chart (drawn from the low in '02 to last year's high).

  • http://www.for-really.blogspot.com Jana

    Perhaps I was the action.

  • Growler

    This could be stupid question (i.e. newbie), but is it possible volume was low today because the players are greatly reduced?

  • molecool

    I'm still able to walk, so I think not.

  • Ukla the Mokk

    mole/Berk, I'm with ya on that afternoon rally…I bought puts the whole way up. DIA and QQQQ both closed ridiculously close to long-term fib retracements I had drawn. SPY still looked like it had room to move up a little. All three are sporting symmetric triangle patterns that are obvious on a ten-day, ten-minute chart. And from what I know, symmetric triangles usually resolve themselves in the direction of the dominant trend…which obviously is down.

  • gagelle

    Negative earnings started coming in. TXN's margins were abysmal.

  • gagelle

    Same with me.

  • yearningtolearn

    Mole & Berk,

    I don't disagree about light volume of this rally, but I do disagree with you that smart money is flowing back into treasuries. The yield on 3 month treasuries improved to 0.93% up from 0.72%. TED Spread also improved to 3.04% down from 3.59%. I know you were fixated on TED Spread and Yen Vs Dollar not too long ago. With all these indicators showing improvement, it wasn't very surprising that we rallied today. Now, things can change again and we go back down hard tomorrow. But we did take out 97.2 on SPY, which was an important resistance. So, I am still taking this market one day at a time.

    Neither my pocket nor my knowledge is deep enough to trade excessively. I am still learning how to trade these markets from experts like you. I thank you for all that you do. I look forward to you updated wave counts.

  • gagelle

    I was doing the same thing mole, adding positions on the way up.

  • gagelle

    View from the street in my town: I believe earnings will be hit hard. Stores and restaurants are virtually empty. Strip malls are half vacant. Every apartment has a vacancy sign up. Half the homes on every block have “For sale” signs up. I don't know if it's this bad in every town, but just over a year ago, every business was packed and people were buying–I had trouble last year finding an apartment. I've been in this town over ten years and I've never seen anything like this.

  • http://www.blog.donnaklinenow.com Donna

    I shorted the close and am still holding some from last week. Precarious position to be in…. not fun. I noticed the TNX as well. Why would there be buying in Treasuries if 'the fiscal package is working?' I am looking to tomorrow mid-day to show signs of a top, or else I fear we have more rally to come. PS I trade the leveraged mutual funds (end of day only) DXSSX DXQSX DXDSX etc.

  • gagelle

    Sorry, mole already commented on this.

  • gagelle

    AAPL is down after hours.

  • C C Rider

    HAHA!! She knows us like a book! She must be well read!

  • JTrader

    I understand that some treasuries rallied today, but the curve flattened today. The 2 year/ 10 year spread is at 215 bps. Last week it was as wide as 245 bps. This indicates credit pressures easing and could help boost equities. Not that we'll retest the lows in equities, but watch the 2yr/10yr spread and 2 year swaps for indicator of risk in credit markets.

  • http://www.for-really.blogspot.com Jana

    Good point.

  • http://moontrader.wordpress.com/ Moontrader

    pretty weird rally, uhm? Light volume, yes. But we need to go back down tomorrow, or we bears are fried.

  • BigHouse (Aka Mr Vix)

    the spread between Moody's corporate BAA bond index and the 30 year treasury bond made another new low today. This tells us that we will make new lows in stock maket soon.

  • TonyPCF

    Amen on the closing bell comment. Should have taken the money and run in the morning, but I stuck to 'the plan' of testing at least 900 again this week. Possibly too early (as usual), but the low volume didn't convince me to cover either.

    Was the rally fueled by the drop in the VIX, is it for distribution purposes, is it what we were expecting at the end of last week but didn't happen? I guess tomorrow (or later tonight) we may have an answer…

  • http://moontrader.wordpress.com/ Moontrader

    Later tonight? Any rumors I don't know?

  • molecool

    Pretty much agree with you there – we might rally a bit more tomorrow morning but should turn before we violate the triangle. If that happens we might face a monster rally. My line in the sand is the peak of the a wave up.

  • molecool

    Hahahaaaa! So, I'm not the only one following that one :-)

    1+

  • jcoors

    Rumor of a secondary bailout

  • molecool

    Your fears are encouraging me – once the toughest bears get nervous I feel more confident about the market making new lows.

  • molecool

    Yeah, remember what happened when they passed the first one.

  • jcoors
  • http://moontrader.wordpress.com/ Moontrader

    And remember that the actual money for the bailout won't come until the end of this month. Meanwhile, credit keeps shrinking.

  • http://www.blog.donnaklinenow.com Donna

    Agency spreads are widening as well. We bears will take anything, I guess. 😉

  • TonyPCF

    What I had in mind for later tonight is 20-30 points coming off of the ES just as easily as they came on in the last hour of trading. (One can hope, right?)

    Question for our hosts (a little nervous bear here): If we are wrong about the immediacy of the lower lows, how high can this move take us? 1010, 1100?

  • http://www.blog.donnaklinenow.com Donna

    Did you see the XLF triangle?

  • C C Rider

    Wow ! I just heard Barry Ritholtz and Scot Bleier both pronounce this recent low as a bottom. I've thought both were accurate in the past, I just think they're early here.
    Having said that, if we don't get a sharp selloff within the first 30 min. tomorrow I'm out and will re-evaluate from the long side.

    This rally was again on low volume and had all the characteristics of the previous bear rallies. It was 400 plus points, started slowly, and gathered momentum towards the end of the day as stops were hit and shorts covered.

    My thesis is still for a big drop this week, and then meandering in a range of Dow 8000 to 10,000 untill after the election. As Mole said the stop has to be the top of wave C.

  • BigHouse (Aka Mr Vix)

    Yes of course widening.

  • http://www.myspace.com/181419967 JZT_CHIL

    Mole, I was here all day… in fact I've been here since last night! (Lol) or over the weekend lurking while working on my 2 businesses from home.
    'Was just shocked with how the market went: low vol & “sneaky” peak to 400+ at the end.
    A totally different day compared to previous months' Mondays after options expiration dates.
    What a fake-out.

  • gagelle

    The Crumbling U.S. Economy, Worse is Yet to Come

    http://www.marketoracle.co.uk/Article6871.html

  • gagelle

    It's Different This Time: Housing, Deflation and Depression

    http://www.oftwominds.com/blog.html

  • BigHouse (Aka Mr Vix)

    Wave a top is where mole gets scared lol

  • fuzzygreysocks

    Mole, I'm lurking here all the time.
    You want me to just post trash or nudie links or… trashy nudie links!… no… wait… that's redundant, isn'tit?
    😉

    I could put up beefcake for Jana, keep to her around more often.
    Maybe some beefcake with cheesecake, even?!
    http://tinyurl.com/Mmmmmbeeeeefcaaake

  • gagelle

    The Role of Hedge Funds in Financial Crisis

    http://tinyurl.com/5wf2bk
    [Open in new window]

  • fuzzygreysocks

    http://biz.yahoo.com/topic/us-markets/
    Strike one – TI outlook misses expectations, shares fall
    Strike two – Comerica shares fall as analysts see headwinds
    Strike three – Zions shares fall after analysts cut estimates
    Strike four – Analyst cuts Prudential rating, shares fall
    Strike five – SanDisk shares down ahead of 3Q report
    Strike six – American Express profit falls, but beats estimates

    And don't forget that wonderful rally on the TARP proposal… followed by the big whoppin' drop a few days later.
    Perchance this “silly rally” on today's discussion of redistribution-of-tax-payer-dollars-to-corporate-EPSs will fade as it ruts against assorted resistance levels.

  • gagelle

    “So there is now a growing chorus saying that the stock market has bottomed out, that is oversold and this is the time to buy. The problem is that all the possible good news about policy makers doing everything necessary to avoid a meltdown were already priced in the 10% jump in global equities on Monday while, from now on macro news, earnings news for financial and non-financial firms and additional surprises from systemically important components of the global financial system, will mostly surprise on the downside with considerable further downside risks to financial markets. These systemic financial risks include: a major surge in corporate defaults rates and fall in recovery rates as the recession becomes severe thus leading to a further widening of credit spreads; the risk of a CDS market blowout as corporate defaults start to spike; the collapse of hundreds of hedge funds that, while being small individually, will have systemic effects as hundreds of small funds make the size of a few LTCMs in terms of their common deleveraging and selling assets in illiquid markets (as theisWednesday equity meltdown showed); the rising troubles of many insurance companies; a slow motion refinancing and insolvency crisis for many toxic LBOs once covenant-lite clauses and PIK toggles effects fizzle out; the risk that other systemically important financial institutions are insolvent and in need of expensive rescue programs while the $250 bn of recap of banks is way insufficient to deal with their needs; the ongoing process of deleveraging in illiquid financial markets that will continue the vicious circle of falling asset prices, margin calls, further deleveraging and further sales in illiquid markets that continues the cascading fall in asset prices; further downside risks to housing and to home prices pushing over 20 million households into negative equity by 2009…” —Nouriel Roubini October 17, 2008

  • BigHouse (Aka Mr Vix)

    I am not worried about Mr Vix going below Berks level of 57.50. This Vix is moving not a couple of points a day but has swings of 10 points or more. Keep in mind that there was a huge trade going on at the Nov 75 calls. Over 29k thats over 20 plus points out of the money now. This reminds me of a simular trade back in Sept when one person place a big trade at the Oct 50 calls. Thats when the index was in the mid 30's. HE bought them at .10 or .20 cents. They ended up going up to $11 bucks. I wonder if the trader held on to them that long. My point is this …i am adding to my position on the Vix. The calls might be expensive now but wait till wave 5 comes. Its going to get alot more expensive. I am hoping they get alittle cheaper. Time will tell.

  • Ukla the Mokk

    The thing is, the bottom IMHO will be a process and not an event. No one will be able to realize that a bottom was formed until months afterwards. So during that extended phase of accumulation, whenever that phase may be, it will pay to be cautious. And risk management is always priority #1. That's how I'm governing all my decisions right now.

  • Ukla the Mokk

    Because I know you're all hanging on by the seat of your pants for my contribution, here it is. :)
    All of these either retraced or closed damn near a major long-term fib level or present what I feel to be a nice reversal pattern (or are one “good” candle away from a nice reversal pattern):

    AMZN, ATI, CLF, COF, DIA, FLR, ICE, MOS, PRU, PX, RIMM, RTH, SOHU.

    Be sure to check earnings on these puppies…AMZN reports on Wednesday I believe. And if you accidentally leave a position on, you could lose both on price action and volatility crush. I'm not sure about PRU, but for two days in a row it opened below the 78.6% fib level and closed above it. So if it fails to close above it, I think it'll swing lower.
    Hope you all find this helpful. I personally hope we crumble tomorrow as I currently have 3 contracts of puts on MON.

  • Bartholomy

    No volume … people covering short ?
    I think it will rally up …. will try shorting SP @ 1050, but it can go up to 1200.

    You can have amazing deal .. buy stock, sell call option, get a nice reduction.

    We need to be patient.

  • wanessafruas

    Heavy volume might be possible in near future?

  • nkm45130

    Any of you guys notice the sizable rally the airlines have had over the past several sessions? Many of them look like they are retracing nicely to broken support and might be prime for a short play in the next couple of days . . .

  • ProZachJ

    any charts you could post?

  • ProZachJ

    I just kept accumulating all day…I don't buy this rally for one minute i think the only way we go significantly past SPX 1047 is if the PPT starts working overtime again.

  • C.C. Rider

    Sweet! Looking for crumbs! A hammer on declining volume.

    http://stockcharts.com/h-sc/ui?s=$NDX&p=D&yr=0&

    And, mr. Vix didn't give up the 20dema. Something to build on.

    http://stockcharts.com/h-sc/ui?s=$VIX&p=D&yr=0&

  • molecool

    Thanks for that gagelle – Nouriel rarely disappoints.

  • molecool

    “I just kept accumulating all day…”

    You were not alone. Took on quite a bit of red, but didn't care.

  • ProZachJ

    Neither did I :-). I had been really hoping to load up at 992 spx but
    alas we didn't get there. I have been scaling in since last week and
    my mind won't be changed unless we breach about 1045 on some damned
    decent volume

    Zach jones

  • molecool

    I know it's scary, but this is really the only way. In hindsight some will say that it was best to load up on the top (and it is) – problem is you don't know when that hits. For me (and Berk) this represented a clear and present opportunity to benefit from a lower VIX. If we continue to rally tomorrow I will continue to load up. My line in the sand is similar to yours – 1020 would be a bit scary – and I probably would pull the plug on 1045.

  • gagelle

    Insiders’ Share Sales on Margin on the Rise

    http://www.cnbc.com/id/27280949

  • toad37

    I bought November DIA 85 puts at the close.

  • molecool

    Aren't you the news patrol tonight!

  • http://z-stock.blogspot.com/ zstock

    TXN tanked in AH 6% and that brought down HPQ,DELL,INTC in AH and now it's 10PM pst, and the DOW futures are down 80, It's going to be a miserable day for the bulls on Tuesday.
    I'm so glad I closed out all my longs right at market close.
    I just wished I could have posted that info here sooner.
    To know how I knew DIA would crash 92.5-( about 90% certain) at the BB13 middle band, I posted a chart at my blog site.
    I also blabbered it all day ( 92.5) non-stop at beannie's, where I post during market open.

  • LeoOfPisa

    Point up for the avatar toad. This market will turn with the Flick of the Switch. 😉

  • ProZachJ

    Gosh I can wait till I get some real capital together and can do this full
    time. I had no Idea I would love trading so much…its like a system you can
    never quite grasp…a constantly changing mystery, even the boring days are
    exciting.

  • toad37

    Thanks brother.

    +1 for yours too.

  • ProZachJ

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