I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Tuesday, February 2, 2010

Volatility Schmalatility

Yep, the VIX is a squirrely beast indeed (are squirrels technically beasts? Rabbits certainly are, just see Monty Python and the Holy Grail for proof). Lots of break outs and breakdowns. Tales of angst and woe ... yet hope remains ... for more volatility?

Anyways, that's what I think. Volatility has been drawing inexorably down for over a year, just as the market has been inexorably rising the last 9 months. Yet, I don't think that trend will continue. In fact I expect it to rise pretty dramatically in the not-too-distant future.

The VIX was putting on some serious positive divergence for a while, and I think the spike down a few weeks ago (while still maintaining positive divergence) was the end of the move. Here are my three longer term VIX charts:

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