Get Ready for a Huge Move
By Jeff Clark
August 13, 2009
Get ready for an increase in volatility.
The Volatility Index (VIX) – often used as a measuring stick for fear among investors – is at its lowest level since last September. More important is the Bollinger Bands – a measure of volatility for the VIX – are also as narrow as they've been since last September.
Take a look...
This is a chart of the VIX plotted along with its Bollinger Bands. The bottom chart shows the width of those bands.
The VIX typically declines as investors grow more complacent and less fearful with the stock market. You can see how the decline from elevated levels back in March has coincided with the rally in stock prices. Conversely, the VIX rallies as investors grow more fearful – as evidenced by the rocket shot higher in the VIX last September.
The current relatively low level of the VIX indicates investors are less fearful of a decline in stock prices.
But it's the narrow Bollinger Bands that grab my attention. You see, tight Bollinger Bands usually occur before a large-scale move in the chart. So the VIX is on the verge of a big move one way or the other.
It doesn't have to be to the upside. Indeed, a sharp decline in the VIX would widen the Bollinger Bands just as quickly as a sharp rise. However, with the VIX trading at its lowest level of the year, the odds favor a move higher.
And a rising VIX usually means lower stock prices.
Best regards and good trading,
Jeff Clark |
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| • |
Coffeehouse Starbucks continues huge rally to reach new 52-week high... up 133% from March low. |
| • |
Shoe specialist Crocs hits new 52-week high... up 500% from March low. |
| • |
Uranium giant Cameco climbing... up 40% this year. |
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Earnings today... AmBev, Blockbuster, DeVry, Dr Pepper Snapple, Kohl's, Wal-Mart. |
|
Last |
Change |
52-Wk |
| S&P 500 |
1005.81 |
+1.15% |
-22.01% |
| Oil (USO) |
37.35 |
+1.33% |
-59.18% |
| Gold (GLD) |
92.95 |
+0.17% |
+15.44% |
| Silver (SLV) |
14.34 |
+1.77% |
-0.42% |
| U.S. Dollar |
77.97 |
+0.49% |
+4.96% |
| Euro |
1.43 |
+0.42% |
-4.46% |
| VIX |
25.45 |
-2.08% |
+20.22% |
| HUI |
353.39 |
+0.80% |
+8.92% |
| 10-Year Yield |
3.70% |
0.01 |
-0.21 |
|
|
| Company |
Sym |
Industry |
| AEP Industries |
AEPI |
rubber & plastic |
| Crocs |
CROX |
shoes |
| China Automotive |
CAAS |
auto parts |
| 3SBio |
SSRX |
biotech |
| China Green |
CGA |
fertilizer |
| Poniard Pharma |
PARD |
biotech |
| Scailex |
SCIXF |
electronics stores |
| i2 Technologies |
ITWO |
business software |
| Global Brands |
GQN |
acquisitions |
| Velan |
VLNSF |
industrial machines |
| MarketAxess |
MKTX |
broker |
| Horsehead Holding |
ZINC |
metals |
| Dollar Thrifty |
DTG |
rental cars |
| John Bean Tech |
JBT |
machinery |
| Sourcefire |
FIRE |
security softare |
| Informatica |
INFA |
business software |
| SP Acquisition |
DSP |
acquisitions |
| Clearwater Paper |
CLW |
paper products |
| United Refining |
URX |
acquisitions |
| Lubrizol |
LZ |
chemicals |
| Abaxis |
ABAX |
diagnostics |
| Valassis |
VCI |
marketing services |
| General Growth |
GGWPQ |
malls |
| Credit Acceptance |
CACC |
credit services |
| Piper Jaffray |
PJC |
asset management |
| Avis Budget |
CAR |
rental cars |
| MedAssets |
MDAS |
health care IT |
| SXC Health |
SXCI |
health care IT |
| PHH |
PHH |
credit services |
| Euronet Worldwide |
EEFT |
electronic trans. |
| Aixtron |
AIXG |
machinery |
| E-House China |
EJ |
real estate broker |
| CAE |
CAE |
defense |
| Perfect World |
PWRD |
online games |
| Open Text |
OTEX |
software |
| Medarex |
MEDX |
biotech |
| NBTY |
NTY |
drug products |
| Valspar |
VAL |
building materials |
| Ball |
BLL |
packaging |
| NBTY |
NTY |
drug products |
| NV Energy |
NVE |
utilities |
| Cree |
CREE |
semiconductors |
| JMP Group |
JMP |
broker |
| Banco Santander |
SAN |
bank |
| Quest Software |
QSFT |
business software |
| Waste Mgmt |
WM |
waste mgmt |
|
| Company |
Sym |
Industry |
| APP Pharma |
ABII |
biotech |
|
|
|
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