The emotional levels charge up with every big market move. Up or down, the 'juices get flowing' as the wonderment and curiosity are piqued. How do you feel when the Dow moves up 150 points? The same as when it moves down 200 points? Of course not, but the adrenaline rush may be equal, yet our emotions at different ends of the spectrum. We talk in terms of fear and greed, and this is plainly seen and measured using the VIX. This volatility measure actually TELLS us how players are feeling at moments in time, a sort of temperature gauge.
We've seen alot of movement lately in the VIX. How do we interpret the recent moves with the market and moreso how do we determine the next move? The extreme move in a couple of days in the VIX was just two weeks ago, and for some it seems like ages. The move was sharp, up more than 50% in just the two days, an amazing run that was a statistical anomaly. That was quite the spike and moved the needle to heavy fear. Since then that fear has subsided but so has the complacency increased. Should the market be worried about unseen blows? Certainly so, and if not then those playing will eventually be punished like Jan 21/22...unannounced!
This week's worry is about jobs, and of course that data comes it's way each day from Wed-Fri, with ADP's report, jobless claims and the ultimate: employment from the government. I'll be watching the VIX over the next couple of days as this will be a short term clue as to the market's reaction to these big reports. If the VIX collapses more the market is comfortable and sanguine, but if it rises say, past 25 after the release of numbers...we could see something more serious developing.
Subscribe to this comment's feed
