Tuesday, February 4, 2014

VIX Indicates a Search for a Short Term Bottom

Yesterday's session on Wall Street set a record on VIX volume. Having in mind that VIX is a risk measure, I can conclude we saw a Fear yesterday.

                                                         source: www.stockcharts.com and CBOE

Of 2,382,752 contracts which changed hands yesterday, 1,850,206 were call contracts. It means that a lot of traders were hedging their positions against further U.S. stock market losses.
In the past, such a heavy trading was a good indicator of the short term bottom in the S&P 500. If this story repeats again, we should see a bottom within a few days.

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