Stock Trading: The Only Thing You Need to Know About the VIX
There may be as many different opinions about the VIX, the Chicago Board Options Exchange SPX Volatility Index, as there are traders, investors and pundits to have them. Maybe you have your opinion about what the VIX “really” means.
Like most traders, we used to have an opinion about the VIX. Fortunately, we now have data, and what the data tells us about the VIX is different from what the vast majority of market pundits have to say about the VIX.
So here’s the only thing you need to know about the VIX:
The proper way to use the VIX is to look at where it is today relative to its 10-day simple moving average. The higher it is above the 10-day moving average, the greater the likelihood the market is oversold and a rally is near.
You can read the rest of the chapter (actually, you can read the whole book), for free here:
Download Short Term Trading Strategies That Work: A Quantified Guide to Trading Stocks and ETFs
The next time you hear someone saying that the VIX is “high” or “low”, ask them “compared to what?” When it comes to the VIX, it really is all relative.
Above quote from Chapter 5 of Short Term Trading Strategies That Work, “Use the VIX to Your Advantage … Buy the Fear, Sell the Greed”. To download your copy of the book – or to have a free paperback shipped to you – click the download link above.
Semiconductor Sell-Off and Buying in Supermarkets: 7 Stocks You Need to Know
Some of the stocks highlighted in yesterday’s 7 Stocks You Need to Know were among the market’s few clear winners ahead of the final trading day of the week.
Up more than 4% after a two-day pullback that brought the stock into oversold territory above the 200-day moving average were shares of ^KR^.
Fellow supermarket stocks like ^SWY^ were also higher on the day. SWY gained more than 3% to bounce back above its 200-day moving average. Gaining more than 2% ahead of Friday’s trading was Whole Foods Market Inc. ^WFM^.
Shares of ^AXP^ (below) rallied to gain just over 2% after a two-day pullback above the 200-day.
Meanwhile, closing lower for a second day in a row, but not yet oversold, are shares of ^MA^.
It’s hard out there for a retail stock. Shares of ^PIR^ pulled back by more than 4% on Thursday despite reporting increased earnings that were in-line with analyst expectations.
Semiconductors remain a continued source of weakness in the technology sector. With the ^SMH^ dropping below its 200-day moving average (the ^QQQ^ did so on Wednesday), it is little surprise to see declines in major sector names like ^NVLS^, which pulled back by more than 6% to reverse all of its Wednesday gains, and ^ATML^.
Shares of ATML have closed lower for two days in a row above the 200-day moving average are are just outside of oversold territory.
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David Penn is Editor in Chief of TradingMarkets.com