Here’s a 22 year chart of the VIX Volatility Index. I used VIX yesterday to make a decision about a short trade, but I have reasonable expectations (hence, Dec 2014 puts and not anything more dangerous, ha).

Yes, there are sharp spikes, but longer term, it bottoms out in rounded vallies.
Below is a chart of S&P 500 Index for the same period.

Overlay of the two charts:

 

If I were short here, I’d be buying. Here’s a few random indicators (my favs of late) that paint the picture.

Click images to enlarge

  • WSJ buying on weakness $166 million as of 3:30pm
  • SPX/SPY is deeply oversold
  • SPY is sitting right on 50SMA, a decent support level
  • SPY volume low on this drop
  • Large traders are buying (bottom box)
  • Precious metals are holding up well, and also dropped on low volume. Showing my pet SLW:

Yes, I’m actually committing to a direction here.

The other night, I had the weirdest 2-part dream. My dreams are often prophetic (yeah yeah, whatever). If you’re into that sort of thing, here’s the dream message: fuel – on fire. Doesn’t take a rocket scientist to predict that oil / gas are going higher. But “on fire” means A LOT higher.

(SPY: 242.71 -0.16%) 20-year chart, 1-year bars.

I was looking for a fitting pattern, and only the triple top seems right. I’m still mostly long the markets, selling options to hedge and to collect some money while holding.

Click to enlarge

Latest insider buy/sell stats, as of March 8th.
In addition to this, there’s been some selling on strength of SPY, not super significant but around $150MM yesterday.

And here’s the SPX chart with all the indicators.
Short-term, somewhere half-way between oversold/overbought, but longer term (top stochastics) shows that the index may drop further.

End of transmission 🙂