Friday, August 22, 2008

VIX Update and What I'm Watching

The VIX has made 12 lower lows since the July highs in the VIX. I consider anything 12 and over to be stretched and time to start expecting a reversal in the markets. Also, despite the large price gains today, the volume on QQQQ and SPY was very low, which does not convince me that this rally will last.

The short-term model is close to overbought, but not quite. I am going to suggest exiting it on Monday morning, as a bit of personal judgement on this one instead of waiting for it to get more extreme.

Three trades I would take immediately are STZ, DIS, and DD. All these would be short sales or put option trades.

Pete

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