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Along with the corn farmers, many of us traders are longing wistful for the good old days, or at least August of 2011. With memories of last summer’s volatile market still fresh, the talk a month or two ago was of cancelling summer vacations to man trading desks. The fear was of a repeat of last August’s turmoil, when the S&P 500 slumped and daily moves of 4 per cent briefly became the norm.
That now seems completely insane as this August has been a veritable yawn. The VIX index – a measure of investor expectations of volatility commonly known as Wall Street’s “fear gauge” – has been indicating unruffled confidence. On Monday, the VIX closed at 14.2 down nearly 60% in 12 months.
So what the heck is going on??? Aren’t we supposed to be days away from financial Armageddon over the survival of the euro, the resolution of the “Fiscal Cliff,” a contentious and expensive campaign season, a weakening Chinese economy, and scores of other maladies?
Perhaps it’s a game of financial don’t-wake-the-baby. Let’s keep our voices down, play soothing music and pretend that all is well and that it couldn’t possibly wake up screaming and crying like a demon spawn. Maybe we are all going to wish we hadn’t let the thing nap so long.
September and large parts of the fourth quarter of any given year will, on average, see an increase in the CBOE VIX Index. Investors seem to grow more concerned about the direction of the market once Labor Day is in the rear view mirror. The average August VIX reading since 1990 is 20.84, but the average September VIX registers at 22.17, which is an average increase of 6.4%.
While it may be a somnolent August, let’s hope we will have the fall of discontent. Trade well and follow the trend, not the so-called “experts.”
Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banking mafia.
larrylevin@tradingadvantage.com
Trading Advantage
(888) 755-3846  |  Larry Levin's Trading Advantage is a leading investment education firm that empowers traders to achieve and surpass their financial goals. More than 50,000 students have used Larry Levin's proven techniques for powerful results. |
Trading Signals from the Electronic (ES) mini-SP 500
- FT sell @ 9:56am at 1412.00 = b/e (1 lot)
- Algorithm positions (2)
- “Reading the Tape” positions (0)…combined Secret’s, Algo, & “Reading the Tape” total… +1.25
Click Here to See Yesterday's Detailed Results
ES 1414.75 / 1410.75
POC... 1412.00
YM 13242 / 13220
NQ 2780.50 / 2771.00
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Keep a civil tongue.