Take a look at the attached chart of the VIX. It "seems" to have broken out.
What does that mean to me? Well, if the VIX is in an uptrend, the Markets (Nifty/Sensex) will correct. On the other hand, if VIX is in a downtrend, the markets experience new highs. I do not know if this is a FALSE breakout. However, all break-outs usually retest the base of the channel before moving up. If we did see a break out today, we can expect the VIX to retest the base and then move up - this could indicate that we may see a few bullish days before moving DOWN Alternatively, if the VIX heads back down below the channel we may have another upmove for a new high. Keep in mind the dates that I wrote about - 5th and 7th May could be days when Nifty is at it's lowest. Let's see how this spans out. For tomorrow - Nifty will retest 5240 / 50 / 60 (try to short at higher levels - May Series) and hold until the 5th / 7th of May. We will look to buy stocks around this time frame. Read more below about VIX: What is VIX? India VIX, a volatility index based on the Nifty 50 Options prices, thus reflecting the market’s expectations of volatility over the near term. The India VIX is a simple but useful tool aimed to assist investors in regulating the overall volatility of the market. The volatility index is not only used as an indicator of implied volatility of the market but also provides information on various tradable products, such as futures and option contracts, on the volatility index worldwide. Implied volatility as captured by the volatility index refers to the implied risk associated with the stock markets and not the size of the price fluctuations. When the market is range bound or has a mild upside bias, volatility is globally observed to be typically low. On such days, call option buying (a position taken on the view that market will move lower) generally outnumbers put options buying (a position taken on the view that market will move higher), indicating lower risk. On the other hand, when selling activity increases significantly, investors rush to buy puts, pushing the price of these options higher. This increased amount investors are willing to pay for put options shows up in higher readings on the volatility index. High readings indicate a higher market place but the volatility index can also be used as a contrarian indicator, since spikes in the volatility index are associated with a market fall. -- Posted By Gautam Bajaj to Equity + Nifty - Positional Strategies at 4/29/2010 12:35:00 AM -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en.
