Friday, August 27, 2010

Looking into the Abyss ?

VIX: Ready for Lift-Off?

The 28% level is the critical point for the VIX. A decisive break out above 28 would indicate that the markets are about to get a little 'rocky'. Stay Tuned.

Royal Bank of Canada
RY has retraced 38.2% of the tremendous rally from the 2009 lows. Canadian banks came out of the financial meltdown of 2008 relatively unscathed but the current chart of RY is suggesting that some trouble might be brewing. In order to negate this omen the stock will have to reverse to the upside sooner than later.
Support levels have been violated while volatility has increased significantly. The last few sessions produced losses that were accompanied by increased volume. NOT A GOOD SIGN.

Apple Computer:
Several months ago I included AAPL along with BIDU and GOOGLE as potential Kamikaze put option trades.
Since that posting on May 28th
  • GOOG has declined $40.00/share
  • BIDU has increased by $3.00/share
  • AAPL has declined $18.00/share
While you could not have realized a profit from the BIDU if you purchased short term contracts, depending on what strike prices were purchased for GOOG or AAPL it is possible that one could eke out a profit. I still think that both BIDU and especially AAPL qualify for kamikaze speculations at this point in time.
If the market does fall out of bed, the downside potential of AAPL may be quite significant. Apple's share price is hanging by a thread.