Are we in or nearing the capitulation stage of bear market?

[utrecht]

I suspect that buy and hold will outperform since there will be very long periods where you are out of the market while waiting for VIX to go above 30.

My only point is that if you do whatever you normally do....but then buy SPY (or SSO for more leverage) when VIX goes above 30 (including using margin if so inclined) and then sell when VIX goes below 20....you will increase your profits.

 

[al_bundy]

I suspect that buy and hold will outperform since there will be very long periods where you are out of the market while waiting for VIX to go above 30.

My only point is that if you do whatever you normally do....but then buy SPY (or SSO for more leverage) when VIX goes above 30 (including using margin if so inclined) and then sell when VIX goes below 20....you will increase your profits.

why do you have to be out of the market? VIX is a good indicator of tops as well and you can use other tools to see if we are close to a top for a few months. most 401k accounts will let you trade once every 30 days, and doing so once every 3-4 months is OK.

 

[al_bundy]

I'll concede that the VIX is a great measure of market panic. It follows the old rule of buying when there's blood in the street. What you can't predict with the VIX is that when you buy a 30 you won't know that you could have gotten a better deal at 40.

I'm sure someone could do a multi year calculation of buy the S&P with the VIX at 30 and sell at 17. Then compare that to a buy and hold of the S&P index over the same period.

Heck. Some data might be useful.

haven't had time to learn it myself, but for the last 50 years or so people have been researching using Japaneese candlestick patterns in conjunction with some of the indicators made up here in the USA.

i've read that a lot of people have found that using shorter term indicators like stochastics and looking at candlestick reversal patterns when the stochastics are in overbought or oversold levels gave nice returns, in excess of normal market returns.

Japaneese candlesticks were first invented in Japan to graph rice prices and to find patterns in their rice trading market.

i have 20-30 blogs i read every few days and this has given me much better returns this year than reading all the usual rags or websites

 

[2B]

haven't had time to learn it myself, but for the last 50 years or so people have been researching using Japaneese candlestick patterns in conjunction with some of the indicators made up here in the USA.

i've read that a lot of people have found that using shorter term indicators like stochastics and looking at candlestick reversal patterns when the stochastics are in overbought or oversold levels gave nice returns, in excess of normal market returns.

Japaneese candlesticks were first invented in Japan to graph rice prices and to find patterns in their rice trading market.

i have 20-30 blogs i read every few days and this has given me much better returns this year than reading all the usual rags or websites

I used to be a big technician. I found all the wonderful techniques (including candlesticks) are a great way to sound knowledgeable and financially sophisticated in describing what happened but totally useless to reliably predict future movements.

I've done much better in the buy and hold mode even with the recent drubbing.

 

[utrecht]

why do you have to be out of the market? VIX is a good indicator of tops as well and you can use other tools to see if we are close to a top for a few months. most 401k accounts will let you trade once every 30 days, and doing so once every 3-4 months is OK.

I didnt say I was out of the market. I was responding to 2B who wanted to compare somethng like this:

Buy and hold SP500 from Jan2000-Dec-2007....compared to

Buy SP500 anytime after Jan2000 only when VIX oes over 30 and sell when VIX is less than 20 (or 17..or whatever).

At least thats what I think he meant and if so, the second scenario will have you totally out of the market alot of the time.

 

[FUEGO]

Just took a peak at the market, and the activity today is starting to make yesterday look like a bottom! Or this is a dead cat bounce. Broad domestic and international indexes up 4+% across the board right now.

 

[al_bundy]

i think it's a bounce for a few months maybe until next year

 

[2B]

I didnt say I was out of the market. I was responding to 2B who wanted to compare somethng like this:

Buy and hold SP500 from Jan2000-Dec-2007....compared to

Buy SP500 anytime after Jan2000 only when VIX oes over 30 and sell when VIX is less than 20 (or 17..or whatever).

At least thats what I think he meant and if so, the second scenario will have you totally out of the market alot of the time.

I was just questioning whether the VIX provided value as a market timing tool. Just looking for data.

As for todays rally, we were getting pounded down again when an announcement came out that there is a "resolution trust like" agency planned to be created to deal with the current credit crisis.

I'm sure if this really breaks the credit crunch the pundits will point to yesterday as the "capitulation." I'd say the rules may have changed today.

 

[al_bundy]

i'll believe it when i see it, the systemic risks may go away but after the short covering goes away people will still have to worry about the economic issues.

 

[dex]

I'll concede that the VIX is a great measure of market panic. It follows the old rule of buying when there's blood in the street. What you can't predict with the VIX is that when you buy a 30 you won't know that you could have gotten a better deal at 40.

I'm sure someone could do a multi year calculation of buy the S&P with the VIX at 30 and sell at 17. Then compare that to a buy and hold of the S&P index over the same period.

Heck. Some data might be useful.

What you're basically asking for is and indicator to tell you this is the "Top" or "Bottom" - otherwise know as "The holy Grail" - don't let anyone know once you found it. Once everyone knows about it - it stops working.

 

[dex]

Japaneese candlesticks were first invented in Japan to graph rice prices and to find patterns in their rice trading market.

The magazine of Technical Analysis did a study of it years ago and didn't find it any good as an indicator.

 

[al_bundy]

The magazine of Technical Analysis did a study of it years ago and didn't find it any good as an indicator.

like any study, depends on how it's done. i read that if you look at them when other indicators are at the extremes they are accurate. otherwise not really

 

[dex]

like any study, depends on how it's done. i read that if you look at them when other indicators are at the extremes they are accurate. otherwise not really

STOCKS & COMMODITIES magazine
here's the link for the mag.