The surge in the VIX, CBOE Volatility Index, above Friday's "emotional high" coupled with the behavior of the SPY and the QQQQ urged me to get long, but to "pick" a bottom using call options in the Q's. With the VIX above 81 and also above Friday's high at 76.94, the fear and extreme volatility factors are extreme, a strong suggestion of another violent countertrend move in the equity market ETFs is approaching fast. In addition, the fact that the QQQQ pressed to new bear phase lows, and did not go into a nosedive, while the SPYs did not make new lows signaled to me that the decline off of Tuesday was complete and a powerful rally likely.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.