Saturday, October 17, 2009

VIX Warning of Extreme Complacency - Top Might be in Place




I almost missed this important event, but I heard Pete Najarian on CNBC's Fast Money mention the VIX and that it was down and I nearly fell of my chair. In the morning the VIX had rallied from the almost 4% drop to a new yearly low on Thursday and since the market continued with weakness into the close I made the mistake of assuming the VIX was up; WRONG. The VIX dropped another 1.3% Friday, despite the market falling fairly hard all day. This means that people were buying a lot more call options than put options on a fairly solid down day, and in doing so they pushed the VIX to the most complacent level it's been in all year.

This is big. This shows such a high level of complacency and optimism toward the market that it warns of a possible top in place RIGHT NOW. When you add the 5 wave decline in the futures and other data I mentioned in previous recent posts, it tells us that THE top might actually have just snuck up on us and be in place right now.

BE ON HIGH ALERT FOR A MAJOR TOP IN THE STOCK MARKET. THE VIX COMPLACENCY AND THE 5 WAVE DECLINES ARE HUGE WARNING SIGNS.

9 comments:

adan said...

i watched my dvr recording of fast money awhile ago, and can see how it'd be easy to miss that call re the vix - nice post - thanks!

Todd S said...

Lol, I DVR'd it too and caught it. I'm glad Pete mentioned it, I might have missed it altogether.

Monday should interesting. Thanks for the comment.

Todd

Michael Eckert,aka-Columbia1 said...

Nice Job Todd!!

Gustavo said...

only 3% more in the dow jones left to end this trend.
And there is less place to continue in the sp500~1%
We will see what happend.

Gustavo said...

Interesting are the news about the new coin the "sucre" what devaluates more the dollar.
Too much.

Todd S said...

Gustavo, I haven't heard about that new coin. What other info do you have.

The US dollar should be bottoming very soon, as I'm sure you already know. I'll do my best to cover it here.

Todd

Todd S said...

Thanks Michael!

Gustavo said...

Todd:
There is not much info in English, and I supose this is not very serious.

http://cryptogon.com/?p=11725

Todd S said...

Great article find, Gustavo. You've been great in catching these. I have not heard about this specific instance however I have heard of dumping the dollar by many countries. Like you're saying, the dollar sentiment and attitude is supportive a major dollar bottom forming.

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