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My early comments on KLAC GOOG OIH and VIX


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#1 A-ha

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Posted 05 February 2007 - 02:32 PM

http://xtrends.blogs...nd-overall.html



Monday, February 05, 2007
Comments on KLAC, GOOG, OIH and overall market

As you may remember, I said equipment makes were the only segment in SOX that performed better compared to the rest of the sector. It is because of a new chip cycle that created increase in equipment orders , however the rest of the sector stayed under pressure as inventories actually got worse.
So this past story is now on the news and gaps shall be distributed by the institutions that have been in the sector for the last 4-5 months. The market will price future expectations and these companies currently offer the best short opportunities in the SOX.

Also as you may remember, we had warned you about GOOG last week that GOOG broke down its lifetime trend-line and set to test 450, possible 420 area in the near future. GOOG has been and will be under pressure till these levels were tested. Of course, further weakness could be seen beyond those levels depending on market conditions.

http://xtrends.blogs...-brokedown.html

Yesterday, I was shocked when I stepped out of JFK, it was one of the coldest whether I have ever seen in New York. When I got to home, I checked the whether channel, dew point was -29 C. I believe this is the temperature that Alaskan people are familiar with. What I am trying to say here is that despite this bizarre condition, crude oil seems to be saturated at the current levels. Also note that $OSX and $XOI indices lagged the entire upside in crude. I believe these sectors are setting up for another downside swing and it is entirely possible that even before this cold whether is gone, we could see these sectors cratering as they were before.
I expect these sectors to chop around the current levels at best until the temperatures approaches to seasonal norms and I believe it will be a shorting opportunity.

Lastly I want to make a note of something rather unusual about the market. Something that I mentioned before. It is the implied volatility that changes the relativity between volatility and prices. It is the VIX I am talking about here. As you may have noticed, VIX is up significantly as the overall market is flat. It is because the implied volatility that increases during the topping process and creates a divergence between VIX and SPX. However this doesnt mean the market should immediately go down, this means the upside will be extremely limited, in fact the prices could still drift upward while VIX strangely rises. I suggest you to take a note of this event and try to observe it as it happens. This could be quite educational for some of the readers here.
Click the link to see the previous post about this phenomena.

Implied volatility and Market tops

Edited by xD&Cox, 05 February 2007 - 02:34 PM.


#2 dasein

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Posted 05 February 2007 - 09:10 PM

OTOH, we may have the kiss of death here, the economist did an article on the unusually low VIX reading. It is interesting to me too, now that we have VXN and VXO, I see a few articles in the public press refer to VIX as = volatility. klh
best,
klh