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Sunday, March 8, 2009

CPC, VIX in the Bear Market

Whats puzzling is the VIX and put/call ratio have remained somewhat "ambivalent" at best since the SPX was sliding at around 780 SPX. The VIX has always spiked higher on Minor Wave 3's as compared to wave 1's. Also the CPC has always gotten put heavy consistently near the bottoms. But since near the low of wave 1(5) in January this has started to diverge. Are traders getting smarter? Hard to say that since the market keeps dropping and they keep betting rally.

In fact, the entire bear market, significant lows at many degrees the VIX and CPC have always spiked near or at the bottom together to combine for near term lows in each respective indicator.

So in conclusion I can only come up with a few logical answers:

1. Traders figure the bottom HAS to be near. Possible outcome: They prove to be correct and everyone makes big money (Is that even possible?)

2. Traders are in for a big surprise if/when the market just keeps dropping through the 600's possible high 500's. Outcome: They keep losing big. Eventually they get doubtful and fearful again in the right doses.

3. Traders have started to pay attention to Elliott Wave Theory. Possible Outcome: The waves will just keep stretching lower until Traders get "stupid" again.

Its scary. I think everyone would prefer a capitulation move. This slow bleed has me worried. The market is always right.

Feel free to comment. I do not claim to be a VIX or CPC expert.


  1. any thoughts of us being in only 1 (3) 5?

  2. That can't be Erik. That would make wave 3 of (5) about 10 miles too long.

    I think a move to toward the mid to sub 600 level will start to wake evberyone up.

    Wave 3 expansion hasn't even hit 1.618 yet (652)

    I only expect a VIX reading of 60-65 max. Actually above 57 would be sufficient for me. Probably if that happened, the CPC would move appropriately too.

  3. I mean a move to the mid 600 level or sub 650 level.

    A move to the upper 500's would be explosive.

  4. that's what i thought and said.

    He said "yea...maybe it is 3(5) but i dont think this 3(5) is guaranteed to be over yet.

    He has first a 651 target

    as well as a 549 5 (5) target, fyi

  5. Back in 2003, the VIX did not reach a higher level when the market reached its third bottom. I viewed that negatively(not enough fear at a lower level)and thought the market would keep dropping. I was wrong but believe the PPT etc had a firmer control of events at that point in time.
    I have followed the CPC and VIX closely as well and found the CPC MACD histogram offers good signals for trading. The VIX appears to be finishing a triangle off the highs. I am expecting a good bounce of a week or 10 days before setting up a sudden drop back to new lows which should spike the VIX up.
    CPC appears to be setting up for a bullish turn which should give us some nice short entries.
    I agree that lack of fear seen with these drops and lows is amazing, which is why we keep dribbling down. And every time we bounce, the
    CPC drops to ridiculously low levels within days and sets up for another drop. I truly believe that Ben et al are really trying to save the bond market and will let support bonds over stocks. LeeAnn