Trader Dan's Market Views: 08/30/12

“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)

"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people. Source – The Declaration of Independence

Thursday, August 30, 2012

Volatility on the Rise

It is interesting to note the price action of the CBOE Volatility Index or VIX of late. The S&P 500 appears to be struggling to break through the 1420 - 1425 region. That combined with growing concern that tomorrow's Bernanke comments are not going to be sufficiently "QE bullish" is fueling nervousness among traders who are fearful of being caught in any downdraft resulting from disappointment among the "punch bowl" crowd.

This same concern is also providing selling pressure in the metals with gold bears capping at the $1680 level while nervous longs exit the market. Dip buying however is coming into the metals from traders who suspect that the ECB is getting its act together on its bond buying program.

The result is that both metals have faded from chart resistance levels but are not breaking down technically.

You can see the VIX Chart below: