Inside Trading brings you Adam Oliensis this week, who details the VIX and what it means to traders.
Next, Lee Gettess uses his experience to analyze the S&P and bond markets for the coming week.
Jea Yu provides the following article explaining why it is better to trade based on market activity, and not methods.
George Angell wraps up this issue explaining market symmetry, and when to be aggressive.
The Volatility Index (VIX) is derived by calculating how relatively cheap or expensive the index options are on the SPX. When options players are pricing options for low expected forward volatility, these options get cheap and the VIX sinks. When options players are pricing options for high expected forward volatility, these options get expensive and the VIX rises.
The VIX is what is called a "contrarian" indicator. When the VIX is low, the market tends to be near a top, and when the VIX is high, the market tends to be near a bottom.
A subscriber wrote to us that he was skeptical of the importance of the VIX. He suggested that we were making a great "leap in deduction" concluding that the market was WRONG when it had climaxes in the VIX. He didn't think we had a good rationale for our conclusion that climaxes in the VIX "meant" market bottoms.
Lee Gettess' Market Sense
Lee Gettess is a top trader who is excited to bring you his video newsletter. Each week, Lee will share his predictions on what he anticipates from the bond and S&P markets.
Click the above image to view the video
The following is an excerpt from Jea Yu' Full Circle
A Variant Perspective of the Markets
Trading is simply a matter of trying to profit off of price fluctuations. Sounds pretty simple. A stock price can go up or down. How hard can it be to step in for the ride when it goes up, and sell before it goes down? How tough could it be to short a stock on the way down before it bounces back up? This sounds simple enough. If a stock can only go from point B to point C, or point A, then you just need to enter a position when it starts to make its way. It seems so simple.
Let's add some more factors to this simple phenomenon. We can assume that a stock will eventually go from point B to point C or point A. However, it may start off going to point C initially, only to reverse quickly back through point B and end up at point A. In between point B and point C, there are ten mini stops in between, and five of those stops branch off towards other points in between. While it would be nice to get a straight move in either direction, in most cases, the stock will take many detours and look to change directions along the way before it eventually arrives at a specific point. In fact, when the stock looks the most likely to arrive at point C, it will often completely reverse back to point A in a panic, or vice versa. This is not to say that sometimes the movement from point B to point C can't be fluid and steady - in fact, that is where you want to be along for the ride. So the question is, how can you distinguish the steady ride from one point to another as opposed to a choppy, rough ride with no real clarity?
Market Symmetry will Prevail and When to be Aggressive
In this continuing series of George Angell's day trading rules from "Sniper Trading Workshop," George presents rules thirty and thirty-one. First, Angell explains how market symmetry will prevail. He also looks at V pattern symmetry. Second, George provides pointers on when it is best to trade aggressively.
Click the above image to view the video
Adam Oliensis is editor of the trading service The Agile Trader. He has been a full-time independent trader, investor, technician, and editor since 1997. Oliensis was chief trader for 21st Century Alert's Single-Stock Futures service.He has been a regular contributor to numerous financial websites over the past 10 years including Realmoney.com, 21st Century Alert, Bullmarket.com, and Rightside Advisors, and Superstock Investor.
Adam got started in the markets early, at age 9, investing $44 in a share of ADP. He later sold his original investment for a profit of $1,364. In the 1990s, he became an active technical analyst and trader, and launched his first options service.
Former "Law and Order" actor, computer geek, and master
technical trader Adam Oliensis reveals how you can...
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