Uptrend's Account Talk

[nasa1974]

I'm thinking that VIX could go all the way down to the 15-16 area before it reverses. The market just has too much strength right now. Just a hypothesis...

JR

As long as the VIX doesn't go below 15 or above 20 the rally should continue.

 

[Birchtree]

The VIX is a sentiment indicator and should be used as a contrarian indicator - when it is low investors have no fear and that is when the blind side hits you.

 

[WhoDey]

So, I should be worried when it is high and when it is low?! I can see that investing is going to be a lot of fun ... :worried:

 

[Birchtree]

When the VIX is high is an excellent time to buy because prices are so much cheaper - but it's very difficult to buy when everyone else is running away. You have to have discipline - that's where dollar cost averaging is important. It's one of the primary benefits of your TSP account - always keep it on. The only thing we have to fear is no fear.

 

[MrJohnRoss]

I understand the inverse relationship between VIX and the market, but is there any predictive quality to the VIX or does it only reflect what one can directly see in the market?

I hope that question makes sense ...

Your question makes a whole lot of sense. Take a look at my post here, and I think you'll see how the $VIX can be read to gauge fear and greed, and how they relate to tops and bottoms in the market.

Hope this helps,

John

 

[WhoDey]

Your post does help. Thanks.

I can see what Birchtree was saying ... when the prevailing mood is that things are bleak ... that's a good time to get in as things will improve. When the mood is that everything is great and living is easy ... that's when we should be watchful as good times eventually end.

 

[Uptrend]

The market is trading in a box; SPX for example has been trading between 1333 and 1300 for the last week. And by the way I count waves, intermediate wave 4 down may not be finished. Bonds are not a tell, but US dollar is trying to wake up. Still looking for a little more cooling in the markets. When the TA does not tell, I don't trade, but wait.

 

[RealMoneyIssues]

The market is trading in a box; SPX for example has been trading between 1333 and 1300 for the last week. And by the way I count waves, intermediate wave 4 down may not be finished. Bonds are not a tell, but US dollar is trying to wake up. Still looking for a little more cooling in the markets. When the TA does not tell, I don't trade, but wait.

So true, lets see if we actually get to see anything below 1300 any time soon...

 

[bmneveu]

I'm betting on it

 

[RealMoneyIssues]

I'm betting on it

So did I, but it won't matter anymore... I'll take my loss and move on

 

[nasa1974]

So with the FED's intent to sell bonds next Thursday do we see a move to the F fund for a few days and than back into the markets?

 

[Mcqlives]

So with the FED's intent to sell bonds next Thursday do we see a move to the F fund for a few days and than back into the markets?

Exactly what I am hoping for. Hope it isn't the trap getting sprung though!

 

[WhoDey]

So with the FED's intent to sell bonds next Thursday do we see a move to the F fund for a few days and than back into the markets?

Newbie questions ...

1. How do you know the Feds intend to sell bonds next Thursday?

2. How does this influence the markets ... specifically the funds available to us. How does the Feds selling bonds drive the F fund up?

 

[jpcavin]

Newbie questions ...

1. How do you know the Feds intend to sell bonds next Thursday?

2. How does this influence the markets ... specifically the funds available to us. How does the Feds selling bonds drive the F fund up?

Hope this helps. I'm still learning as well.

1. http://online.barrons.com/public/page/barrons_econoday.html
2. http://articles.latimes.com/2011/sep/22/business/la-fi-twist-qa-20110922
http://www.investopedia.com/articles/economics/08/monetary-policy-recession.asp#axzz1lFc4E9dh

 

[WhoDey]

Thanks ... I'll need to chew on that information for a while.

So, the Feds sell shorter term bonds and purchase longer term bonds ... and that drives up the bond market?

Thanks again!

 

[FishSqueezer]

There was also this thread that you might want to check out...well the start and end of it anyway

 

[WhoDey]

Thanks FishSqueezer (interesting name!). It looks like the auction dates are well known. I don't understand, however, how the Feds selling bonds helps the F fund ... or would influence C/S.

 

[jpcavin]

Thanks FishSqueezer (interesting name!). It looks like the auction dates are well known. I don't understand, however, how the Feds selling bonds helps the F fund ... or would influence C/S.

How's this?
F FUND
Interest rates influence the movement of this fund. When yields move lower, bonds go up in price and the F fund goes up in value. When yields move higher, bonds go down in price and the F fund goes down in value.

OPEN MARKET OPERATIONS
Open market operations are simply the buying and selling of government bonds in the open market. If the Fed buys treasury bonds in the open market, they pay for them with cash and receive bonds from investors or banks. The cash is deposited into banks and the money supply is increased. The increased supply of money lowers its value and interest rates fall.

How does the Fed entice investors to sell their bonds? They must raise the bid for the bonds. Raising the bid creates a supply of bonds. When the price of bonds rises, the yields (interest rates) fall.

Similarly, if the Fed wants to raise interest rates, they will sell bonds in the open market. By selling bonds, investors and banks will hold the bonds and give up cash. The supply of money in the hands of the public is reduced and its value – the interest rate – rises.

How does the Fed get you to buy bonds? By lowering their price, the law of demand says that more people will buy. As the Fed reduces their prices of the bonds, the bond yields (interest rates) rise. On any given day, the Fed is usually buying or selling bonds. http://www.optionsatoz.com/classes/...rates/howdoesthefedcontrolthemoneysupply.aspx

If Fed BUYS bonds ---->Money Supply is increased ---->Interest rates(yield) fall ---->F Fund goes up
If Fed SELLS bonds ---->Money Supply is decreased ---->Interest rates(yield) rise ---->F Fund goes down

 

[WhoDey]

That's how I thought it would go ... Fed sells bonds ... money supply is decreased ... interest rates rise ... F Fund goes down.

It seems like you would want to avoid the F Fund in this situation.

 

[jpcavin]

That's how I thought it would go ... Fed sells bonds ... money supply is decreased ... interest rates rise ... F Fund goes down.

It seems like you would want to avoid the F Fund in this situation.

Keep in mind that the markets don't always behave like they're supposed to. Sometimes I question the usefulness of information such as this..