Showing posts with label Fall Equinox. Show all posts
Showing posts with label Fall Equinox. Show all posts

Sunday, March 4, 2007

Market Timing

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Fari Hamzei

Given the high readings we have empirically observed in our Volatility Indices during the last week, for market timing purposes, go to CASH for a minimum of two weeks -- past the March Quad-Witching Options Expiration (Friday, March 16th) and the Vernal Equinox (March 21st, 00:07 GMT).

Market participants should expect massive vol expansion at or near the March Expiry, while historically speaking, both Vernal & Autumnal Equinoxes, plus or minus 1 to 2 days, have often been a time for key reversal days in the equity markets.

First, let's review our 'new & improved' Timer Chart.

While a -222 reading on McClellan Oscillator for NYSE and a -196 reading for NASDAQ's sounds like a good buying opportunity, we are mindful of recent outlier events for VIX (see my Feb 28 post titled, "Volatility -- My Two Cents").


Part of the reasoning here is for us to wait and observe the strong vol retest we expect both in magnitude and Sigma Channel position. That event should complete before the month end. This is also in line with the talk Sherman McClellan gave at our last meeting of LA Chapter of MTA, which met on January 30th in Seal Beach, CA.

Here is VIX sigma chart as of Friday Close. Notice on Friday, VIX fell below +3 Sigma. Ideally, VIX, as part of our anticipated vol retest, should visit +4 to +5 sigma levels before the dust settles.

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