Two Ways: Volatility Takes a Holiday
Strengthen your portfolio in good times and bad.
The Chicago Board Options Exchange Volatility Index, better known as the VIX, is hovering at its lowest levels since September 12, the last day of trading before Lehman Brothers filed for bankruptcy. According to Bloomberg, the VIX has fallen 13% this week, signaling a significant decline in options prices. It has declined 64% since it exploded to 80.6 in November - the highest level in its nearly 20-year history.
For more on the VIX, see Professor Adam Warner's Volatility Decline More Truth Than Illusion.
From the Bull Pen: Be careful making assumptions with a "low" VIX ahead of a long holiday weekend. Continue to look at sectors showing strength for upside exposure and use the common stock. Monsanto (MON) may have to play catchup with other agriculture stocks; a sell stop can be set below $88.
From the Bear Cave: Bears can keep an eye on Con Ed (ED) crawling up the slippery slope back to $36-$36.50 resistance, and consider testing the downside if and when it gets there.
Quick Check Around the World
Asian trading closed with the Hang Seng -0.39%, India -1.69%, Nikkei 0.59%, Shanghai -0.94% and Taiwan 0.72%.
Glancing towards Europe, we see the CAC 0.30%, DAX 0.45%, FTSE -0.34%
As of 8:10 AM EST, S&P Futures are trading +5 to 911.00, and Nasdaq futures are +2 to 1398.00.
A Look at Commodities
Over in commodities, crude oil is trading +0.56 to 60.66 while gold is +4.90 at 931.60 this morning. Silver is +0.160 to 14.28 and copper -0.20 to 206.75.
The dollar index is -0.2750 to 81.7800.
On the Radar
10:30 Crude Inventories
02:00 FOMC Minutes
Click here for the full trading radar.
Hump day! Two more days until Fat Friday! Good luck!
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