E VIX And A Blog

My website has become unhinged because of alleged holes in its security and nobody can log on, not even me until someone fixes it. So today’s blog is being sent out by a secure website which consolidates financial newsletters, into which I have invested, talkmarkets.com

The sign-in button on the www.global-investing.com site has been blocked for being insecure and you cannot log on with your email address and password nor can you override the warning that appears on many websites these days. The one on my site is blocking signing in because the site is insecure, and it is blocking in every browser I have tried using. This may be another malicious attack by a fellow blogger, which has happened in the past; or an attempt to extract money from my company by hackers, which also has happened.

A very interesting article posted on the Schwab site by Randy Frederick argues that volatility spikes (when the VIX goes over 30 but remains under 40) and particularly extreme volatility spikes (over 40) are a buy signal. In the month after an over 30 VIX rise (but under 40) the stock market average S&P 500 gains 1.2%. Over the month after the 30 spike it gains nothing, but over the full year, it is up 7.%.

With extreme volatility, the spike is rarer but much more of a buy signal. In the following week an over 40 VIX the S&P gains an average of 2%; first month an average of 1%; and in the first year an average of 13.9%. Note also that the 40+ levels were typically reached after the S&P had already entered a bear market—which is not the case this time either.

My conclusion is that buying after a VIX boom is a good tactic but you can take your time and make sure that there won’t be a higher spike. So far the Feb.5 VIX hit 37.32 and the S&P gained 0.3% in the following week, hardly worth trading. Month and full-year data are not year known.

We have two and a half reporting companies to deal with today along with some more nice price jumps despite the impact of a surprisingly strong dollar (for a currency where debt is getting worryingly high.) We have news from Denmark, Israel, Canada, Hong Kong, Brazil, Norway, Australia, and a few other places today. 

*Orocobre of Australia reported on its H1 results to Dec. 31. Revenues in the half came to US$ 63.2 mn as 5.532 metric tonnes of lithium were produced. Cost of sales per tonne fell to $4.336 mn and cash margin per tonne topped $13.8 mn. Its half-year gross margin came to 62%.