The sellers did indeed come back out today. The NASDAQ opened on its high for the day and closed on the low, which is never a good thing. It fell 58 points (3%) from the open and engulfed yesterday’s bullish candlestick. All of this happened on a big increase in volume. The index now sits at a new 9 month closing low. Maybe it will hit the bottom of that trend channel after all. 
The Dow got repelled by its 50 and 200-day moving averages today, while the S&P 500 stopped just shy of its 50 DMA and reversed to close under its 200 DMA again. Both of those moves also came on higher volume.
There was one slightly bullish development today — the VIX is started to rise. Maybe we’re finally getting some fear in this market.
I would LOVE for someone to explain why and how the VIX has moved “relatively” little during these sell-offs? Even the VXN (volatility index for the Nazz) is near its lows for the year, and the Nazz has had the stuffing beaten out of it in just the last 3 weeks. I suppose the worst implication of these levels is that when, if ever, these volatility measures DO get moving it means the market could have a whole lot more to fall from here. I would LOVE for someone to explain why and how the VIX has moved “relatively” little during these sell-offs? Even the VXN (volatility index for the Nazz) is near its lows for the year, and the Nazz has had the stuffing beaten out of it in just the last 3 weeks. I suppose the worst implication of these levels is that when, if ever, these volatility measures DO get moving it means the market could have a whole lot more to fall from here. I would LOVE for someone to explain why and how the VIX has moved “relatively” little during these sell-offs? Even the VXN (volatility index for the Nazz) is near its lows for the year, and the Nazz has had the stuffing beaten out of it in just the last 3 weeks. I suppose the worst implication of these levels is that when, if ever, these volatility measures DO get moving it means the market could have a whole lot more to fall from here. I would LOVE for someone to explain why and how the VIX has moved “relatively” little during these sell-offs? Even the VXN (volatility index for the Nazz) is near its lows for the year, and the Nazz has had the stuffing beaten out of it in just the last 3 weeks. I suppose the worst implication of these levels is that when, if ever, these volatility measures DO get moving it means the market could have a whole lot more to fall from here.
The VIX is about halfway to where it needs to be before a major rally happens.
My best guess for why it hasn’t tracked (well, countertracked) the market well lately is that each day’s change has been so incremental that there hasn’t been anything motivating much put buying.
I’d love to put some volatility in this market. I haven’t written covered calls in a while as I am fearing a rally. I’d like to see the channel break and write some covered call, or I’d like to see a better bounce than the wiggle bounce I just counted on!
Luckily I do not mind playing morning gaps, that allowed me to dodge a large caliber bullet this morning! Phew!!!!
Trader Mike,
Do you always sit fairly idle during the earnings season? It seems as though a trend develops pretty early on and you can overnight most players who are due earnings that evening. Even though some did move upwards, I think by being in the game each night and getting gap stopped out the losers might have been significantly profitable week-week and a half. I know earnings doesn’t always follow a clear trend like this, but this one seemed quite like that, even with yesterday’s runup. Any comments on this phenomena, or similar stories of playing it that way?
jason.
Jason,
Yeah, I always tread lightly during earnings season and I never hold a stock in my trading account through an earnings report (I do hang on through earnings in my long term account). It’s just too much of a crap shoot for me to stay in through the report. After a compnay reports it becomes fair game for me to trade. So I’ll start putting more names on my list as we get deeper into the season.