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Mix-Ansicht- Ve/eX/O (VXO) we see more LOW! - Emerald, 29.09.2004, 22:22
- Re: Ve/eX/O (VXO) we see more LOW! / oder auch nicht... - ---Elli---, 29.09.2004, 22:43
Ve/eX/O (VXO) we see more LOW!
-->The 10,000 game is most certainly continuing, and Tuesday's intraday charts of the Diamonds Trust (DIA - 101.03) and the session's net ticks say it all.
But for the support operation, it's now"Houston, we have a problem". And that problem resides in the volatility indices.
Per the VXO chart below, we put in our second lowest close of 2004 (13.23) on Tuesday on a mere 80-point lift from the10,000 mark.
Exactly how low will the VXO go if we rally, say, another 300 points? 11? 10? Less than 10?
My point is that the bulls are getting boxed into a corner as the volatility players become more and more comfortable with 10,000 as the point of maximum downside risk. At some new lower level of volatility, the premium sellers will begin to balk and the premium buyers will be awakened from their deep sleep.
A swing from premium selling as the driver of option trades to premium buying will almost certainly have negative implications for the stock market. And the lower the level of the VXO when this swing begins, the greater will be the risk of an explosive downside market move.
Bernie Schaeffer
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