VIX technical analysis

On the left hand, the unbelievably unprecedented VIX level of 70 – far higher than I thought it might rise but that is driving it higher still with the OCT Options telling the story. The 70 call with the underlying at 70.56 is 2.00/2.20 – the 70 put 17.80/18.50, that’s 9 times ratio at the money. We are at a combo 10 day, which basically means at least 2 higher closes above 70 and these days the VIX jumps in 10% terms daily. Well, we are witnessing unseen events and will see a bit more at some point. The DOW reached at the low today the magnitude of the 1929 first big leg drop of 48%, which was followed by a 50% rally from that 195 DOW low. We are making one of the steepest wave 3 extensions I have seen. Wave 1 up was 15 and wave 3 is up right now 54, which is factor 3.6 and we are heading for 4 times which is 78. The hourly charts confirms that VIX has a bit more to go as well.


~ by behindthematrix on October 10, 2008.

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