Optuma Blog

Articles of interest & reports on trading, technical analysis, money management, and all things Optuma.

Here’s a Quick Way to Gauge Health of the Market

Market breadth is an area of technical analysis concerned with gauging the market’s health. This is done by tracking the balance between buying and selling pressure. It’s like tracking who’s winning a game of tug of war…

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The Volatility Ratio: Does it signal market bottoms and tops?

Last time we examined what can be gleaned from measuring fear in the market using the volatility indexes of individual stocks in the S&P 500. These implied volatility indexes revealed expectations of future volatility. The same volatility indexes are useful to gauge when market moves are at extremes.

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What does the FEAR index tell us about market conditions and the turmoil in China?

Perhaps you’ve heard of the FEAR index? It’s not an actual index. It’s what the VIX (S&P500 Volatility Index) is also known as. And with good reason.
The VIX measures implied volatility—what is expected in the future. The reason it’s called the FEAR index is because the higher it is, the more it costs to insure the portfolio. When market participants expect or ‘foresee’ higher near-term volatility, that translates into a higher cost of protection because it costs more to insure.

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