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Things Could Really Get Insanely Bullish (Preview)

By Lawrence G. McMillan

In the November 1929 - April 1930 rally, stocks rose 48% and volatility (all that we have to go on from that time period, of course, is realized/historic volatility) dropped from 112% to 8%!! Then we all know what happened after that: the wheels came off, and the market made new lows by October 1930, and the rout was on.

The current status of $VIX is such that it has pretty much declined steadily from its peak in the mid-80’s in mid-March to where it is today (roughly 28). There have not been any substantial rallies by $VIX since then, and it seems that it might not be far from crossing below its 200-day moving average. If it did, that would end the intermediate-term threat to the stock market. Does this mean that the “V” bottom from March 23rd is really the bottom after all? Perhaps, but before you jump to that conclusion, remember what happened in 1929-1930.

The chart above is of the 1929-1930 time period. It begins at the end of October 1929 – just after the Crash of ‘29 and just before the market bottomed in early November 1929...

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