VIX Soars as Signs Increase For Summertime Stock Blues

[Joanne98]

Wall Street's favorite fear gauge soared more than 13 percent Monday, reflecting trader sentiment that the stock market is likely to move lower.

The Chicago Board Options Exchange Volatility Index again climbed past the 30 level amid a gloomy outlook for the global economy that presaged a sharp negative move from stocks. A reading of 30 or better is generally indicative of high volatility and seen as a bearish sign for the broad-based Standard & Poor's 500 index.

Options traders have been betting on a higher VIX recently. More signs have begun to indicate the VIX was likely to keep gaining as investors look for the long-awaited pullback from the massive three-month rally that has sent stocks about 35 percent higher from the March lows.

"Fear is definitely back in the market," said Dave Rovelli, managing director of US equity trading for Canaccord Adams. "It's a huge move. People don't know what to do."

Stocks fell Monday after the world bank issued a downbeat outlook for most of the world's economies.

Commodities stocks, looked to be a leadership group if Wall Street was heading into a true bull market, weakened significantly. At the same time, Dow transports, often considered a bellwether for market movement, fell about 4 percent, more than double the Dow 30's loss and another troubling sign for the market.

http://www.cnbc.com/id/31487739

[paulsby]

1. in general, more fear = more opportunity

if you can trade nimbly.

low VIX environments are grinding for traders.

[Joanne98]

2. Yeah I know. Do you have any good tips?

[paulsby]

3. welll...

my last tips here were to go long oil and short the dollar (long EURUSD) .

that was a few months ago. they both gave IMMENSE profits.

but most of my trading is short term (like often trades last less than 2-3 minutes), so that's not the kind of thing i can share.

however, when and if i see another HUGE opportunity like oil and the dollar were a few months ago, i WILL post it here.

[FlyingTiger]

4. Here's a "HUGE opportunity."

Short the market in general.

This rally has been fueled by the financial sector, which was artificially inflated by the Fed (with some help from the Treasury). With doubt being cast on the rally, the Fed could theoretically step in to keep things moving on up, even if that movement had no real basis in the rest of the economy. But that won't happen for one all-powerful reason - when stocks plummet, investors flee into Treasury bonds. Bernanke needs those bonds to gain value, because their current prices are pushing mortgage rates too high. In other words, he'll let a big dive in the stock market occur, because it's the only way to force Treasury prices back down.

Cause. Effect.

[wuvuj]

5. An interesting video on market timing....

...that includes cycle analysis...

Probably need to give an email...you can ignore the commercial aspects....

Predicting an atypical/seasonal uptrend into Sept/Oct...but a longer term 3 yr bear market low....B&H investors burned again?

http://weiss.streamlogics.com/June22-09/