These are only EXCERPTS! You definitely need the full details from John Mauldin at Seeking Alpha: "Path dependence explains how the set of decisions one faces for any given circumstance is limited by the decisions one has made in the past, even though past circumstances may no longer be relevant. In essence, history matters With regard to the future, the choices we make determine the paths we will take. As I have been writing for a long time we have made a series of bad choices, often the easy choices, all over the developed world. We are now entering an era in which our choices are being limited by the nature of the markets.
Not only are we in a path-dependent world but the number of paths from which we may choose are becoming fewer with each passing year Our economic future is more and more a product of the political choices we make, and those are increasingly difficult We have no good choices. We are left with choosing the best of bad options. Some countries, like Greece, are now down to choices that are either dire or disastrous. There is no"easy" button."
"Make no mistake, a Greek default is another potential credit crisis in the making. As noted above, it is not just the writedown of Greek debt; it is the mark-to- market of other sovereign debt."
"The lesson here? This is not just a Greek problem. Debt and out of control deficits are a problem all over the developed world. The Greeks are just the first. As Niall Ferguson wrote this week in the Financial Times, the contagion is headed to US shores unless we get our budget house in order. You cannot spend your way out of a fiscal crisis. The current path is simply unsustainable."
"The Nobel Prize economists (who will go nameless here) who say the US cannot default because our debt is in dollars miss the point. Being the world's reserve currency just means we can run up bigger bills, but if we go the route of printing money to pay those bills, that is devaluation and fraud, as the value of a dollar will diminish; and that is tantamount to default."
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Posted to michael.silverton.palo-alto.ca.us
Sovereign Default: Stuck Between Dire and Disastrous
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Posted to michael.silverton.palo-alto.ca.us
Fear Leads the Markets
Peter Schiff, Seeking Alpha: "Those who look at rising stock prices as a harbinger of economic growth are therefore mistaken. These moves more than likely reflect investors growing fear that the U.S. (Iraq War & Goldman sock-puppet created) debt levels will swamp the dollar."
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Posted to google.com
VIX Reversal Signal - Day One
http://evilspeculator.com/?p=14149
Shared by @silverton
Don't say you weren't warned a second and third time ... Yes, I’m back - but my time is extremely limited right now - so without further ado I will present my case. Something very rare occurred today - an event that has not occurred for several months now:
Today represents step 1 in a technical pattern called a VIX reversal signal. To illustrate the pattern I have marked the sell signals in orange and the buy signals in green on the chart above. Since last summer we mainly saw VIX buy reversal signals - all of them concluded successfully. A VIX buy reversal is of course the inverse of a VIX sell reversal signal. The last time we got the former was on October 30th, at which time a certain analyst I won’t name here recommended to more or less ignore it as the market was supposed to continue downwards. I think this is one ignominious call he’ll have to live with as the ensuing bear squeeze wiped out a lot of his bearish followers. For the noobs - here are the rules: For a $VIX confirmed signal you need 3 events:
A close outside of the 2.0 Bollinger Band (20-day SMA) A close back inside the 2.0 BB - this issues the signal A higher close (sell) or lower close (buy) than the close of the day back inside the 2.0 BB - this confirms the signal.
Once you get those 3 events a major reversal usually occurs within the next week. The sell signals are far more accurate than the buy signals. Yes, that last sentence should make any bear hopeful - but it’s been the other way around in the past few months and that’s the reason I only loaded up on a very moderate amount of index puts right before the closing bell. Of course technically speaking I should wait until the confirmation, which is at least two days away - assuming we get it that is. BTW - why index puts? Only because I didn’t have the time to parse through my overbought filter and pick specific symbols. Well, let’s see what happens tomorrow. A close back inside the 2.0 BB would lead me to increase my positions size. Understandably many of you are nervous about shorting this market - and rightfully so I might add. You can only get your dick caught in the elevator doors that many times until you start remembering to zip up your pants after taking a leak. But I have a very fundamental rule when it comes to trading. If I encounter a time tested technical signal that indicates a market reversal is in the making then I have to take it, no matter what. The day my emotions or a directional bias prevents me from following a statistically proven technical trigger is when I must retire from trading. For what it’s worth: It would be nice to see a down day for a change - this market is getting on my nerves. I suffer from a mental condition that prevents me from doing what everyone else is doing, especially when it comes to trading. In the past few months everyone seems to be doing the same thing over and over again - and it’s working for them. That’s not how it has worked during 99.9% of the stock market’s history. I’ll leave you with that to chew on. Mole (some of you might remember me) P.S.: The Rammstein notification module has now been activated - have fun [extracted from VIX Reversal Signal - Day One via feedly]
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Posted to google.com
SPX Historical Volatility at Two Year Low
http://feedproxy.google.com/~r/VixAndMore/~3/GiZDs3YBxuk/spx-historical-volatility-at-two-year.html
Shared by @silverton
Don't say you weren't forewarned. While it is widely understood that the VIX has a tendency to fall during the holidays (due largely to fewer trading days), a point that slipped past many pundits is that historical volatility (HV) has been excessively low during the past few weeks. In fact, last Wednesday the 20 day historical volatility in the SPX slipped below 10.00 for the first time since October 2007, about one week after the SPX topped at 1576. Historical volatility in the SPX did rise a little to end 2009 at 10.23, but even at that level, HV sits at the 17th percentile of SPX 20 day historical volatility readings for the past decade. For the record, low HV20 readings pushed the ratio of the VIX to SPX HV20 to 2.12 on Friday – a level has only been reached four times in the last decade. Of those four instances, three (January 2000, January 2002 and May 2007) occurred prior to a substantial selloff. The chart below shows the recent divergence between 30 day implied volatility (red line) in the SPX and 20 day historically volatility (blue line). More often than not, when IV is substantially higher than HV, this is a bearish signal – or at least an indication that it is a good time to take profits. For more on related subjects, readers are encouraged to check out: Historical Volatility and Seasonality Push VIX Below 20 Historical Volatility Pointing to a Sub-20 VIX VIX Holiday Crush [source: Livevol Pro] Disclosure: Livevol is an advertiser on VIX and More
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Posted to michael.silverton.palo-alto.ca.us
Markets: Everyone Knows The Shit Hits the Fan in October
Therefore, the highest probability for $ES_F 600 is shifted to either September or November. In any event, if you're not comfortable with futures hedges, one best find some kind of insurance policy. Maybe iPath S&P 500 VIX Mid-Term Futures ETN or similar, are worth a look.
Remember, save the link so you can come back and make me eat my hat ... or ... bring your hat so we can get you on video. ;-)- Tags:
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Posted to youtube.com
Risk Reversal at the VIX 50 line
http://www.youtube.com/watch?v=a3mK20YtQdc
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