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Guest Post: Volatility Continues To Signal Equity Selloff
Submitted by Tony Pallotta
Volatility Continues To Signal Equity Selloff
Looking purely at the Vix one could say it is moving down as fear comes out of the market. Equities are moving higher, Vix moving lower, all is coming back to normal. But if you look behind the Vix it is signaling a completely different picture.
What I see is something pulling back before a final assault and highly probable defeat of the 48.00 line in the sand. I see the Vix moving up to the 60 range in a matter of days. Perhaps that will lead to the final push lower in equities before some form of a tradable bottom is put in. Perhaps it is already in but judging by the divergence between volatility and the SPX I highly doubt it.
There are three charts I want to share with you below, all of which have commentary on them so please click and read what is written. As a refresher below are the various terms used on the charts.
Vix – measure of volatility or “fear” in the market.
Skew – measure of how implied volatility is “skewed” across the Vix versus a traditional bell curve. For example the more out of the money puts being purchased the higher the implied volatility on those options and thus a “skewed” implied volatility distribution across the Vix.
Divergence – the difference between the Skew and the Vix
IV Skew VS SPX
Divergence VS SPX
IV Skew VS Vix (inverted)
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One can only hope. because This is getting rediculous every night.
http://www.hedgeaccording.ly/2011/10/3-am-spooz-chart-cosine-waves.html
keep it going! :)
http://expose2.wordpress.com
I already was in "WTF?"-mode this morning checking VIX -- thanks for that insight!
When exactly do bull markets regularly have 3,4,or 5% intra day moves? They don't.
Tony Pallotta (whoever he is) is grasping at straws.
TONY PALLOTTA is the man
The bottom is in folks. Shorts are about to have a religious experience.
ROBO? Save it
one more spike down within a week or so just to disgust everyone, but the bottom is not substantially worse than what we just saw. and henge is right about the Phoenix Capitalites, who will be essentially saying "its unfair" as the market defiantly moves upward through january and housing stabilizes.
Gold bottom will be in at roughly the same time, interestingly. Be sure to short the treasuries on this last scaredown
Bottom is 700 with a quick rebound to 910 -980. And it doesn't come until Greece defaults. You're all being effing retarded.
Tom DeMark Indicators tell the same "tale"! Selloff should be more severe this time and lead the S&P well below 1000, not sure if that would then be a "tradeable" bottom but it would imply, correctly, a year end runup to 1250-1275!
Just my 2 cents folks, only insiders really "know for sure" :)))!
WRONG backwoard looking analysis - have a great day as shorts git nuked
yep. there are absolutely no implications from this "analysis". more wishful thinking on the part of those short the market to look for anything that may "technically" confirm their point of view.
it only takes one trader somewhere else in the world with a larger will (or pocket) to see it differently than where you think the market is heading.
Agreed in the short term. But way too much going going wrong in credit to warrant the bottom being in. And stick with equities, a friend pointed out serious money at work in way OTM Oct and Nov puts on the SPX. Still looking for big leg down IMO.
I admit I don't have strong conviction short term. But if we push above 2200 on NDX, which seems likely, I'll have to go short.
That's it. I just can't take it anymore. Stock market permabulls have to be the saddest, most pathetic specimens in the entirety of the human genus. Like tourists in Times Square who will play three-card monte for hours. You poor fools--the writing isn't just on the walls, it's on the floor, the ceiling, the back of your eyelids, under the rug, scrawled across the surface of the sun and on the sides of buses and trains---how much of your earnings are you willing to lose to me? All of it? WAKE UP--YOUR BOOK IS NOT COMING BACK THIS YEAR. YOU ARE GOING TO BE DEEP, DEEP IN THE RED. AND YOU SHOULD BE because throwing your money into NFLX with every other club-weilding cro-magnon moron and believing it will never stop going up is just plain idiotic. There's just no getting through to you morons, you're so obtuse, so un-creative, so unadaptable to changing conditions and fundamentals that you exist in a perpetual delusion that your shit stocks can only ever go up. But fine. If it wasn't for you I'd be having a horrible year, so keep it up, and when the bottom is in, out of guilt, I'll donate some of my winnings to a homeless shelter and hope the money it finds its way back to you....
Someone really wants to keep the DOW > 11K
The market will provide a thrilling roller coaster ride right up to the edge of the cliff and then...........well, it will obviously go off the cliff. Laws of physics will then prevail.
When IBM hits 100, AAPL 250, AMZN 100, the market will be reaching a bottom.
Divergence cross on copper as we speak. All is well. See you at 400, bitchez.
(IV) skew trend down implies VIX is moving to 60
roger that, BiCheZ!
slewie out
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