Sunday, May 20, 2007

VWSI Edges Up to +1

After three weeks of consecutive zero readings, the VIX Weekly Sentiment Indicator (VWSI) has moved off of dead center to +1. The VIX closed the week at 12.76, down 0.16 from the previous week, marking the sixth week in a row that the VIX has closed in the 12s.

While the VWSI is not going out on a limb to predict the direction of the next big move in the VIX, futures suggest that the consensus of opinion is that the VIX will be back over 15 in six months. Predicting the path it will take to get there, however, is another task entirely.

I am officially neutral on the VIX at the moment, with a watch and wait perspective. For what it is worth, I probably will not be opening any long positions in the VIX unless it dips below 12.00 in the coming week.

(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: In my previous roundup of California gewurztraminer, I suggested Navarro and Harvest Moon. For some of my top selections from Alsace, check out Trimbach; Hugel; and Domaine Weinbach. You can also check out the top-rated gewurztraminers in the 2007 San Francisco Chronicle Wine Competition.


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