10-20-2008, 02:42 AM
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Status: Super Moderator Join Date: Aug 2006 Location: Tokyo Thanks: 545
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| Extreme Pessimism - Potential Rally?
Taking a look here at the $VIX and ES. The first chart shows the overlay of the $VIX and ES... notice the extreme readings in the $VIX usually led to a rally. Look at where the$VIX is now. There is extreme pessimism in the markets. Many S&P traders will pay closer attention to the trend of the $VIX. The trend on the $VIX is still upwards creating higher highs and higher lows, and would preferably want to see the $VIX start trending downwards before calling bottoms. 
However, take a look at the ES during these times of extreme $VIX readings. We had heavy volume over the past month will the ES finally creating a higher low on the 16th of October. 
Buying appeared on the tech sector as well creating a double bottom support. Somewhat positive on the short term. 
Taking a look at the Nikkei today. Surpsingly positive, following through from Fridays US action but also leading the way. I am expecting this to follow through into Europe and US today. 
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