Tag: CBOE Volatility Index (VIX)

S&P 500: Prepare For Choppiness

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor


After the S&P 500’s rather flat performance over the first three weeks of January, the Index has finally broken higher, pierced through the 2,280 resistance, and seems well on its way to surge above 2,300. So, the question of potential profit taking for the Index at this time may raise some eyebrows. But if we are to take the signals coming from the Federal Reserve over the past few weeks, this is exactly when we should be worried about profit taking and a jump in volatility for the Index.

While the S&P 500 (CME:SP500) was muddling through over the past few weeks, some attributed it to the protectionist stance of the new US president, e.g. the looming threat of a trade war with China, the risk of import levies and, of course, the latest events of this week. President Trump, in a characteristically dramatic fashion, announced the revocation of the Trans-Pacific Partnership Agreement and proclaimed his intention to renegotiate NAFTA, the North American Free Trade Agreement. And how did investors respond? By pushing the S&P 500 up and out of its stagnation and into a new high. Because, while investors are concerned about the risk of a protectionist trade policy, their concerns are somewhat soothed by Trump’s plan to slash the US corporate tax to 15% and boost infrastructure spending.

But what about the S&P 500 are the bulls ignoring? Continue reading "S&P 500: Prepare For Choppiness" →

Following Brexit, Central Bank Desperation Never More Evident

Posted on by admin

Precious metals expert Michael Ballanger discusses market reactions post-Brexit vote.

To truly appreciate market crashes, you must have an ample serving of grey hair.

Over the weekend, I must have received three dozen "Emergency Email Alert" notifications by newsletter services and financial intermediaries that got absolutely obliterated Friday morning and were expecting more of the same on Monday, which they got in spades. This new generation of "wealth advisors" has, unfortunately, been living off the largess of Central Bank guarantees and the winks and nudges of the "Finance Ministers" and "Treasury Secretaries" and "Chancellors of the Exchequer," where they make investment decisions based not upon analyses of balance sheets or income statements but upon the collective wisdom of Champagne Socialists. I have been writing about this for about thirty-five years and while it has not yet manifested itself in the advance of the prices of precious metals to levels that would correspond to the level of coinciding currency debasement, especially in the United States and Europe, it is going to be the "Talk of the Town" here in 2016. Continue reading "Following Brexit, Central Bank Desperation Never More Evident" →

ETF's That Let You Trade the Volatility Index "VIX"

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


One of the many great side effects to the rise in popularity of Exchange Traded Funds, ETF's, is that they have increased the types of investments individuals can buy into. The average investor can now easy buy and sell funds that hold actual commodities, indexes, bond portfolios, and even dabble in the options markets without ever making a signal put or call trade themselves.

Today, I would like to point out how investors can use ETF's to play the S&P 500 Volatility Index or VIX.

But, before we get into the ETF's that allow you to profit from the VIX's moves, let take a look at the VIX itself and what causes it to move in one direction or the other. The VIX is calculated using option pricing. It looks at the price of the call and put options because we know that higher option prices mean that investors believe there is a greater chance of volatility. Without getting into too much detail about options, the reason this works is because if an underlying security has high volatility it can make an option more or less valuable depending on what side of the trade you are on. Because the level of volatility will change the likelihood, the option will expire in or out of the money.

Are you confused yet? Continue reading "ETF's That Let You Trade the Volatility Index "VIX"" →

The Two Faces Of Stock Market Volatility

Posted on by The INO.com Team

By Elliott Wave International

Volatility, volatility, volatility. It's all the financial world can talk about lately... and, well, for good reason. In the past few months, the world's stock markets have endured some of the most gut-wrenching price swings since the 2007-2009 financial crisis.

But for many investors, it's still not clear what this volatility means for the status of the bull market in U.S. stocks.

The reason why said status remains unclear is in large part because the mainstream pundits haven't exactly been consistent with their punditing. (Note: NOT a real word!)

Take, for example, this summer. Before U.S. stocks fell off the cliff this August, the market was about as volatile as a yoga retreat. The trend was a slow, calm, and steady ascension to a higher self. In fact, the ultimate "fear gauge" known as the CBOE Volatility Index (VIX) had dipped below 12 for the first time since 2014.

Now, according to the usual experts, this extended period of market calm was a bullish sign, as these news items from the time explain: Continue reading "The Two Faces Of Stock Market Volatility" →

In The Week Ahead: No Clear Sign Of A Market Bottom

Posted on by admin

All major U.S. stock indices finished in the red again last week except for the Russell 2000, which gained 2.8%, reversing the pattern that we have seen for most of this year where small-cap stocks lag the market. This emerging strength in small caps may be a good sign for the market between now and year end. But, for now, the broad market SP 500, blue-chip Dow industrials and tech bellwether Nasdaq 100 are all negative for 2014 with no clear sign of a bottom in sight.

All sectors of the SP 500 posted losses last week except for industrials, materials and utilities. One potential bright spot is that my own ETF-based metric shows the biggest inflow of investor assets last week went into energy. Should this continue, it may be a leading indication of a fourth-quarter buying opportunity in this downtrodden sector. Stay tuned.

Keep Your Eyes Focused on Europe

In last week's Market Outlook, I discussed a bearish head-and-shoulders formation in Germany's DAX index that targeted an additional 11% decline to 7,800. I said the positive long-term correlation between the DAX and the SP 500 implied that the broader U.S. market may also be vulnerable to more weakness.

Despite last week's modest rebound, the 7,800 downside target remains valid as long as the March 14 and Aug. 8 lows near 8,913 loosely contain the index on the upside.

The next chart shows the SPDR Dow Jones Industrial Average ETF (NYSE: DIA) broke down last week below the $165.51 support level that I first identified in the May 12 Market Outlook. The ETF has key resistance at $165.63 to $168.78, which contains the 200-day moving average (major trend proxy), the 50% and 61.8% Fibonacci retracements of the Sept. 19 decline, and the 50-day moving average (minor trend proxy). Continue reading "In The Week Ahead: No Clear Sign Of A Market Bottom" →