Extreme VIX Readings Suggest Imminent Upturn
By Mike Paulenoff, www.MPTrader.com
The surge in the VIX (CBOE Volatility Index) above Friday's "emotional high" coupled with the behavior of the SPYs (AMEX: SPY) and Qs (NASDAQ: QQQQ) urged me to get long, but to "pick" a bottom using call options in the Q's. With the VIX above 81 and also above Friday's high at 76.94, the fear and extreme volatility factors are extreme, a strong suggestion of another violent countertrend move in the equity market ETFs approaching fast. In addition, the fact that the Q's pressed to new bear phase lows -- and did not go into a nosedive, while the SPYs did not make new lows -- signaled to me that the decline off of Tuesday was complete and a powerful rally likely.