Sunday, June 10, 2007

VWSI Spikes to -9 on Thursday; Finishes Week at -1

Last week in this space I opined:

“…following the VIX Weekly Sentiment Indicator (VWSI) is a little bit like undertaking a police stakeout: lots of waiting around for a chance to be tipped off to something significant – that may or may not be just around the corner. You never know when something important is about to happen, so it is important to pay attention and be able to react quickly to what develops.”

As it turns out, volatility was indeed just around the corner, with the VWSI cresting intra-day Thursday at -9 when the VIX spiked over 23% in one day, then snapping back to a VWSI of -1 by the end of Friday, after the VIX reversed direction and sank 13%. All told, the VIX ended the week up 16.1% to 14.84, which is the highest weekly close since March 16th.

With a current VWSI of -1, the most likely scenario for the next week or two is for the VIX to drift sideways to down a little.

(Note that in the above temperature gauge, the "bullish" and "bearish" labels apply to the VIX, not to the broader markets, which are usually negatively correlated with the VIX.)

Wine pairing: A VWSI of -1 is a perfect excuse for a pinot noir – in the unlikely event that an excuse is ever needed. Popularized in part due to the excellent 2004 movie Sideways, pinot noir has been on a roll for the last couple of years. Given that I live just a 45 minute drive from Russian River Valley, which happens to be home to many of the world’s best pinot noir producers, it is not surprising that this is a personal favorite as well.

Since this is my first pass at pinot noir in the wine pairing segment of my ramblings, I will steer clear of highlighting a particular wine and instead direct the reader to Zin and Pinot, a blog that I have set aside to talk about zinfandel, pinot noir “and more.” Even though zin gets top billing in the blog title, so far I have devoted considerably more real estate to discussing pinot noir – and have also included a list (with links, of course) to my dozen favorite pinot noir producers.

2 comments:

Danny said...

you like russian river beer? I like their "pliny the elder." I figure if you're immersed in wine country, no way you haven't stopped by the local brewery.

-Danny
Head Janitor, Weekend Services
http://flyonwallstreet.blogspot.com/

Bill Luby said...

Danny,

Thanks for weighing in here. True confession: I have not tried the Russian River brews. I've heard good things about them, but they don't seem to be widely distributed. Since that's not a good enough excuse, I'll try remedy the situation ASAP.

BTW, your blog may be the funniest of all those that talk stocks. Keep up the good work.

DISCLAIMER: "VIX®" is a trademark of Chicago Board Options Exchange, Incorporated. Chicago Board Options Exchange, Incorporated is not affiliated with this website or this website's owner's or operators. CBOE assumes no responsibility for the accuracy or completeness or any other aspect of any content posted on this website by its operator or any third party. All content on this site is provided for informational and entertainment purposes only and is not intended as advice to buy or sell any securities. Stocks are difficult to trade; options are even harder. When it comes to VIX derivatives, don't fall into the trap of thinking that just because you can ride a horse, you can ride an alligator. Please do your own homework and accept full responsibility for any investment decisions you make. No content on this site can be used for commercial purposes without the prior written permission of the author. Copyright © 2007-2013 Bill Luby. All rights reserved.
 
Web Analytics