Does it feel like we've bottomed out?


Emotionally, it's felt to me like the markets have made their final lows. However, I've said that to myself several times in the last few weeks. Truth is, though, we most likely haven't.

Most of the experts I've listened to or read believe this to be the case because they are waiting for a big charge in the CBOE Volatility Index (VIX). According to this article, we're not even close to a Vix value that would indicate an upward trend is around the corner. As I write this, the Vix stands at around $23.50. Many believe it needs to be something like 50% higher to indicate the towel has been thrown in by traders and investors, thus signaling a potential bottom.

This is tough on the investing psyche. People are looking at stocks like Citigroup (NYSE: C), Disney (NYSE: DIS), Coca-Cola (NYSE: KO), and General Electric (NYSE: GE) and saying to themselves, "How much lower can this go, this has to be a bottom now!" Nope. Volatility is king of this domain, and it will need to spike before institutions and hedge funds believe that it's time to put cash on the sidelines to work. Until this happens, fresh 52-week lows may be the order of the day for a long time.

I wasn't fooled on Monday, and neither were you most likely. Right now, oil seems to rule the marketplace (not that financials are out of the picture, mind you), and until that bubble is popped by an interest-rate hike or some other mechanism such as reduction of demand, the bears will be feasting upon the longs. I would love to see a day where the Vix powers up like the proverbial parabola, GE goes to a 5% yield, and an indication comes around spelling out for certain that an interest rate increase is an absolute lock in the minds of the experts. Feels weird to be saying this since I own some financials, but yes, I believe in the dollar-oil theory and think Bernanke will be a necessary agent in bringing things back to order. Of course, geopolitical events might mitigate the effects of such Fed action, but it still seems requisite at this point.

So, keep watching the Vix. Until you see a positive development in this indicator, trade very, very carefully. If you're a value investor, make sure you realize you may be waiting a long time. And if you're a trader, make sure you realize you can be turned into an investor at any moment.

Disclosure: I own Disney, Coke, GE; positions can change at any time.

Reader Comments (Page 1 of 1)

Symbol Lookup
IndexesChangePrice
DJIA-89.2312,801.23
NASDAQ-23.352,903.88
S&P 500-9.311,342.64

Last updated: February 12, 2012: 05:29 PM

Hot Stocks

General Electric

18.875-0.255(-1.33)

Alcoa

10.29-0.35(-3.29)

Apple Inc

493.42+0.25(+0.05)

Google Inc 'A'

605.91-5.55(-0.91)

Bank of America

8.07-0.11(-1.34)

Wal-Mart Stores

61.90-0.06(-0.10)

Exxon Mobil Corp

83.80-1.08(-1.27)

Ford

12.44-0.25(-1.97)

Citigroup

32.925-0.735(-2.18)

IBM

192.42-0.71(-0.37)

Yahoo

16.14+0.14(+0.88)

Starbucks

48.82-0.38(-0.77)

Microsoft

30.495-0.275(-0.89)

Home Depot

45.33+0.06(+0.13)

DailyFinance Headlines

Benzinga Headlines

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

DailyFinance BlackBerry App

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance

BioHealth Investor Headlines

Page Loaded in 1329085778349 ms.