Yes, you feast on the fattened cow, you quench your thirst with the best champagnes. You party every night. And sleep it all off the next day to arise as evening looms, to do it all again.
You think not of tomorrow.
Of course, you are no Robinson Crusoe. Everyone else parties. It is contagious. Of course, some know about it. They have been there before and though they appear to share your gay abandon they are somewhat more temperate. They have squared away their winnings and just enjoy without squandering.
I talk here of the VIX. The volatility index or as some would call it the ‘’Fear and Greed Index’’’. I know it. I have experienced both.
The cold sweat experience when the market tanks overnight. And, the feeling of walking on water, when everything you touch turns to gold.
Let’s look at the index:
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CBOE Volatility index (VIX): Daily Line Chart
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Click to Enlarge
You freaked out in February when the VIX rocketed to a sharp high, but you have settled down progressively over the last few months.
And now to the monthly:
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CBOE Volatility index (VIX): Monthly Line Chart
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Click to Enlarge
You see, in a relative sense you are almost the most relaxed you have been in a long time. In fact, going back to 2007. Oh yeah 2007. I remember that year well.
Well you don’t really have a basis to feel real fear just now:
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All Ordinaries (XAO): Monthly Line Chart
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Click to Enlarge
In fact, all three time spans of the XAO point to a market that still has some impetus and appears to be destined to climb higher. There is safety in numbers as most people share your view.
We could see the Australian market climb to 6800 but there is a good chance it could double top at this level and then head south.
The monthly chart above is interesting in that it says we are sort of there now. Timewise that is. So, within this current time frame – which could be weeks and months but not years – we are sort of there. The market could climb higher so enjoy.
Revel in your partying but have a Plan B.
Enjoy the ride
Tom Scollon
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