Wednesday, October 1, 2014

The silly $VIX is silly

Here's the up-to-the-minute for the $VIX weekly chart:

It's now +3SD on the weekly, which is silly.

However, past silliness is not predictive of future silliness, so I'm willing to sit here and smugly wait. Partially because of this:

I count 7 white candles in a row above the US dollar weekly +2SD line. That's definitively abnormal.

My thinking right now is that the recent $VIX has acted strange because the US dollar move has been >+2SD abnormal. So maybe people will want to buy downside protection on their equities until they see some proof of what's happened to corporate profits with the dollar move?

Thus, it might not be wise to short $VIX just yet.

There's no imminent market crash, but now that currencies are acting weird people are going to be scared and continue buying downside protection.

A UUP breakout above $23.20 or so would be very interesting. If it happens, that is.

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