these charts are so clear that they really don’t need annotations. the bullish falling wedge on the VXN (nasdaq volatility index) just looks almost too perfect that the contrarian in me says to ignore it. however, one potential trick it could pull on the masses (besides a fake-out/false breakout) would be if most eyes are focused on that very well defined, multi-year horizontal support line (which goes all the way back to feb ’06), waiting for it to drop there before taking profits on or hedging their longs yet the VXN breaks out well before we get there (as in very, very soon). the only problem i see with that is if they have even a basic enough working knowledge of technical analysis to spot that clear support area, then why don’t they see the falling wedge and act before everyone rushes for the exits at once as soon as it breaks? ok, maybe i’m over-thinking things here.
anywho… here’s the VIX and VXN, which again, look almost too perfect which has me wondering what tricks are in store here soon. the other thing of interest i’ve noted is the very large move up on the VXAPL, the Apple VIX. yes folk, you heard it correctly… richard branson has his own island in the caribbean, john travolta has his own 727, so why shouldn’t a stock as big and mighty as AAPL not have it’s own volatility index??? now i’m not sure if this will turn out to have any predictive value or just prove to be a temporary glitch but it sure looks like someone with a big bankroll is either betting on a big move down in AAPL or maybe it’s just a big player hedging up (or again, just a temporary glitch). when i look back on this chart, it seemed that the VXAPL was a nearly perfect coincident indicator (moving inversely to AAPL stock price, no predictive value). just wanted to point it out fwiw. maybe some options traders out there could email me if they can confirm (or refute) any unusual activity in AAPL options trading in the last few days. just be careful folks, there are more red flags in this market than at the opening ceremony of the 2008 olympics in beijing.
