Last week we saw huge global rally on Monday. But next two days the gain was almost wiped out. And on Thursday again buying interest sent stock significantly higher. Nevertheless the last low is higher than the previous low I don’t see this as a strong signal to say we have bottomed. We are talking just about three days when the formation has been created. I need to see higher low in coming weeks.

Volatility index VIX (^VIX) reached new highs when crossed above 80 and closed on Friday at 70. This level of volatility has not been seen in two decades. Last time VIX passed this level on October 1987. You can check out trend of CBOE Volatility Index.

I am becoming more bullish in short term horizon. All these fears about recession and financial crisis are already priced in the shares. No surprise if US economy will contracts and fell into the recession. Another important point, there is no more “Lehman Bros case”. I am not saying that there is not possibility of other financial company goes bankruptcy. I simply don’t expect US or European governments to let big financial company failure.

Last 5 posts by Vlada Kynsky

• Jim Rogers about commodities, China and others. - October 25th, 2009
• How to invest in gold now. - October 18th, 2009
• ETF correlation - October 7th, 2009
• Treasury inflation protected securities ETF - October 4th, 2009
• How to invest in gold. - July 11th, 2009