The way my inbox filled up with questions about the VIX's jump yesterday made me think about those old Campbell's Soup commercials -- "Is it soup yet?"
I have been discussing the need for a jumpy VIX for so long that I'm sure you folks are tired of hearing it. But now I see the media has glommed on to this indicator as if were the signal from the Market Gods.
Let me explain something to you about the VIX (or any other indicator, for that matter). Not one indicator works all on its own.
Write that down and paste it to your screen.
You need a confluence of indicators to get a good low (or a good high). The jumpy VIX is just one ingredient.
Yes, it got jumpy yesterday. And it can get jumpier. Do you think any of us will be able to pick the exact low? I know I won't. I can tell you that now.
What I
do know is that we have been oversold for a week or so now, and we have not been able to rally. I also know that the 30-day moving average of the advance/decline line is not yet oversold.
I also know that upside volume as a percentage of total volume on the
NYSE (30-day moving average) still sits at 44%. Previous lows have come from readings closer to 40%-42%. And in the bear market of 2000-02, readings were more typically under 40%, in the upper 30s. Those are the negatives.
I also know that the Index put/call ratio did (finally!) go over 200%. The ISEE call/put ratio sank to 60%. The total put/call ratio on the CBOE zoomed to 153%. And there were fewer stocks making new lows yet again. And yes, the VIX jumped. Those are the positives.
Helene Meisler
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