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by The MoleFebruary 26, 2010

I know – two posts in one day – almost feels like the good ole’ days (when the bears were banking coin). Anyway, I was looking at my VIX chart and suddenly had an epiphany*:

See, if you want to understand how the market works you need to look behind the scenes – and once you look at that you must try to look at what’s underneath. From there you simply forget everything you’ve seen and flip a coin.

Now seriously – look at the chart above. It’s a left/correlation chart between the SPX and the VIX for the past two years. What I noticed is that the VIX seems to become more ‘volatile’ during trend change periods. For instance: Mr. VIX basically pushed straight up during the meat of Primary {1} and then started to flail around sideways right before we got that last leg to the downside. Inversely we’ve seen a straight downward pattern for over six months which then stalled late last year. Since then we have been fluctuating between the 20 and 30 mark, only briefly dipping below 20.

Now also look at that potential fractal right before the ‘oh shit moment’ in August 2008. Mmmmh – does that pattern look familiar to you?

Yes we might get more upside before the pain stops but it seems to me that LONG TERM equities are screwed royally. BTW, did I ever mention to you rats to think long term? Right – I think I might have forgotten… 😉

Enjoy your weekend – and don’t fret about the past two weeks. Think ‘Revenge of the Nerds’… or if you’re the macho type – think Sparta – whatever floats your boat.

Before you run off – here’ s a little supri-iiiise! More evil tees in the works – and more mediums this time. Who would have thought you rats all hit the gym? That’s the spirit – my mean lean army of rat warriors ready to take on the trading establishment.

UPDATE: I just heard that the tees are now live – you guys can place orders as of right now – just click on the image or simply go here. Remember that I don’t make a penny on those – it’s your way of supporting the spirit of Evil Speculator. BTW, there are more colors – poke around.

UPDATE 3:50pm EDT: Hindyomen just brought this to our attention:

Remember three weeks ago when I posted about Jeff Kohler’s warning that there was a bullish McClellan divergence? Well, we’re now on the opposite side of that coin. Plus if you imagine a channel from the top left to where we are now it is reasonable to assume a turning point is coming soon.



* Look it up 🙂

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 the usual social media waterholes.
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