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Posts Tagged ‘VIX

S&P 500 Bullidex ($ES_F $SPY $SPX)

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BPSPXVIX090804The S&P 500 Bullidex formed a new high as it rose 4.05% to close at 308, indicating an increase in the number of rising stocks relative to volatility. Although the S&P 500 has yet to trade above the September 2008 level, the Bullidex shows internal strength comparable to May 2008.

With volatility making lows and more stocks on the rise, the chances of buying and holding a stock for a profit are good, so put your money to work. There is no telling how long the trend will last, or where it will end, but I do have a 1140 price target for the s&P 500.

SPY090804After breaking out on July 16th at $94.32, the SPY hasn’t looked back, and remains in a strong uptrend above a rising upper Bollinger. So long as the SPY can stay above $85.70, equities look like a good way to keep purchasing power.

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Written by chucklesamadeus

August 4, 2009 at 11:07 pm

S&P 500 Bullidex ($ES_F $SPY $SPX)

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BPSPXVIX090722The S&P 500 Bullidex rose 3.33% to close at 270, a new high for the year and a big positive sign for the overall market. Volatility continues to fall relative to the percentage of rising stocks, providing an increasingly advantageous environment for speculative investment.

There are tons of stocks hitting new highs, many of which carry large short positions, fueling their speedy ascent. News continues to inspire fear as sentiment remains skeptical of further upside, but the money makers will continue to scale the wall of worry.

On the other had, a small pullback may be in the works as the NYSE McClellan Oscillator fell 7.73%, a short term bearish signal. Shaking out weak holders and taking profits while trapping more bears is all part of riding the bull, so know your stops and get rid of weakness before it turns into disaster.

Written by chucklesamadeus

July 22, 2009 at 8:18 pm

S&P 500 Bullidex ($ES_F $SPY $SPX)

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BPSPXVIX090715The S&P 500 Bullidex has resumed an uptrend, signaling decreasing volatility relative to the number of rising stocks. This change implies a bullish market conducive to successful investment. I’m long quite a few stocks, and you should really take a look at the list posted by The Fly here.

The economy sucks, unemployment will probably rise, but the market is psychic and it foresees sunshine on the horizon. Actually, there is no sunshine, it’s a psychotic hallucination brought upon investors by their insatiable addiction to financial media, but who cares?

Rational explanations do not matter, for if the market moves, it is best to move with it. Resisting a herd of coked out bulls is a sure way to get trampled. People are scared, all sorts of crazy talk and Congressional whatever-the-fuckery, but there is a persistent bid in the overall market, buy when people are fearful.

Written by chucklesamadeus

July 16, 2009 at 10:00 am

S&P 500 Bullidex ($ES_F $SPY $SPX)

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BPSPXVIX090707Things look grim for the S&P 500 as the Bullidex fell 8.45% to close at 169, breaking the June low. This is a big warning sign to all equity investors as the volatility increases relative to the number of rising stocks, which lowers the probability of successful investment.

Bull markets tend to see a reduction in volatility with a greater number of stocks at new highs, like the rally from mid March to early June. On the other hand, bear markets are emotional, panic driven and erratic, causing investors to seek liquidity by driving down prices.

Don’t fight the trend, just go with the flow and accept the direction of the herd, otherwise you will get trampled. How long this pullback lasts cannot be determined, so it is best to adapt to the current conditions and live to trade another day.

Written by chucklesamadeus

July 7, 2009 at 9:08 pm

S&P 500 Bullidex ($ES_F $SPY $SPX)

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BPSPXVIX090706Despite today’s reversal and positive close in the S&P 500, the Bullidex fell 10% to close at 184. This divergence suggests a weakening uptrend and signals downside risk as volatility increases relative to the number of rising stocks.

The month of June was a whipsaw cluster-fuck for my indicator, but that comes with the territory. Though I did have the foresight to keep my positions small, I gave up a noticeable chunk in trading costs as many breakouts made reversals and the markets oscillated.

I’m trying to brush up on options theory as much as possible, for I’m interested in selling vertical call spreads one month out on FAS and FAZ once they reverse split. Capturing theta decay while shorting with limited risk and hedged delta seems like a good way to play a range bound or bearish market. I’m neutral with an increasingly negative bias, but I’m not running to the exit till I see some confirmation.

Written by chucklesamadeus

July 6, 2009 at 10:41 pm

Financial Bullidex ($XLF)

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BPFINAVIX090623Although the financial sector closed positive on Tuesday, the corresponding Bullidex fell .62%, to close at 159. Higher prices mask the internals of the sector, which is decreasing in bullish breadth relative to volatility. This divergence suggests that the rally is false, and that shorting XLF or FAS is a good idea.

XLF090623The XLF remains in an uptrend above a slightly rising 20sma, but it is still forming O’s below a falling upper Bollinger. A deeper pullback may be in the works if support between 11.45 and 10.99 fails.

If the banks go south, there will be sell offs in every sector as institutions rush for liquidity due to increased margin requirements. Better to stay defensive and wait for a sign of real stability.

Written by chucklesamadeus

June 23, 2009 at 7:29 pm

S&P 500 Bullidex ($ES_F $SPY $SPX)

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BPSPXVIX090622Volatility continues to increase relative to the number of rising stocks, indicated by the 17.69% fall in the S&P500 Bullidex. This trend is not conducive to lucrative investment as the probability of buying a good stock and not getting shaken out diminishes.

Though there will certainly be up days, the odds favor further deterioration. Staying short, in cash, or buying bonds and low yielding currencies is likely to be the most profitable method of trading in the coming days, at least until the trend reverses.

Though a move to the March lows will take some time, the corollaries to the sharp bounce after the crash of 1929 are enough to keep me on the sideline. I’m in no mood to play hero, or try and outsmart the managers who are selling. Stay defensive and liquid, there will be plenty of time to get in once the dust has settled.

Written by chucklesamadeus

June 22, 2009 at 11:19 pm