Triviata

Keep hopeful, it’s a chore

—Margaret Atwood

 Market Notes:

The VIX’ll scare the pants off ya.

The VIX-the Volatility Index-measures the implied volatility of the S&P 500 Index over the next 30 days. Often called the Fear Index, it screams up sharply when traders are caught in a market plunge they didn’t expect (being numbnuts, they never expect a market plunge at tops). The index registered an all time high of 150 during the 1987 crash. In 2008 it spiked to 80. After crashes, it slithers back down below 40, settling down around 20 towards the end of a prolonged rise when traders are fully invested, complacent, and vulnerable.

I was kibitzing with my mentor, Dick Diamond one session back in the late nineties. The market looked toppy then. “The VIX is at twenty,” he said, “it doesn’t get any lower than that. Something sizeable on the downside is due here.” And he was right.

Well, that sucker is not just down to 20 now. It’s closed at 10.85  yesterday. There is absolutely no fear amongst the trading crowd, which, unfailingly sets us up for a crash.

The VIX joins a passel of indicators that are so outrageously overbought, we should be storing potted meat in bomb shelters about now.

People I’m Not Speaking To This Year:

Wal-Mart’s pusillanimous board of directors, for rewarding the CEO with compensation exceeding $20 million last year for pursuing the policy of paying employees humiliatingly low wages, resulting in their dependence on food stamps and other government subsidies to get by, costing taxpayers 0ver $900,000 a year per average superstore according to IBISWorld, an independent market research firm.

Last November, The Cleveland Plain Dealer reported a Wal-Mart in Canton Ohio organized a food drive for its employees. “Please Donate Food Items Here, so Associates in Need Can Enjoy Thanksgiving Dinner,” read signs affixed to the tablecloths on tables outside the store. Sick.

Cheers,

Rod

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