Times like this are tough for traders who insist that their positions have some kind of story supporting them. Technology is strong and probably always will be, but it’s not going back to dotcom levels; China, everybody’s favorite narrative for this decade, seems sort of broken; the agriculture and solar stocks look ready to return to earth after a high-flying run; even oil is looking overextended. And it’s still not safe to talk about real estate or financial stocks.
Tim Knight is…
Our VIX post from yesterday got picked up by two of the deans of options blogging, Adam Warner (shown) and Bill Luby:
The Big Question for the VIX
VIX Jumping the Shark?
VIX and VIX
(and thanks also to Abnormal Returns for the link)
Not much to add in response to all this, except to agree that the increased coverage of this one instrument doesn’t change the fact that it still definitely serves a purpose. When all you have is a hammer, every problem looks like a…
UPDATE: Adam makes basically the same point here. His comment at the end is that this morning’s sustained decline basically sucks the fuel out of any potential gamma fire, which is a good point.
Sure, rallies like this are exciting, but on a medium-term view today’s action doesn’t prove much. We’re still within the recent trading ranges on all the major indexes, and although markets have really taken any good news as an excuse to rally and have shrugged off bad…
Friday’s selloff obviously relieved any overbought conditions that may have persisted, so before the Monday open here are some Reversal Readings we’re keeping an eye on. Remember that we consider any reading above 95 to be well overbought and any reading under 5 very oversold.
XLF – Financials – 0.39
EWA – Australia – 0.65
EWZ – Brazil – 6.22
IYR – Real Estate – 0.53
XLI – Industrials – 3.4
PHO – Water – 9.1
We already have a small bonus trade position in the financials and…
Markets ripped higher pre-open, gave it all back right away, moved higher again, and then gave it all back again through to the close. There: we just saved you six and a half hours, you didn’t miss a thing.
Alcoa announced earnings after the close and missed and is down another 15 cents after a -1.50 day.
Indexes hit some overhead resistance and volume was really blah today. The VIX, which was down another 3% intraday, closed down just 0.03.
Great comment from…
Tuesday, May 27, 2008
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