Depression Watch (Jan.12 2009 to Jan.15)

Dow Close (Thurs) =        8,212.49    12.35 (+)
Dow Close (Wed) =        8,200.14    248 (-)  
Dow Close (Tues) =        8,448.56    25.41 (-)     
Dow Close (Mon) =      8,473.97    125.21 (-)   
S&P 500 (Thurs)   =         843.74         1.12 (+)
S&P 500 (Wed) =           842.62       29.17 (-)
S&P 500 (Tues)   =        871.79         1.53 (+)
S&P 500 (Mon)   =        870.26         20.09 (-)
VIX (Thurs)     =                 51.00        0.83
VIX (Wed)    =                  49.14        0.00
VIX (Tues)  =                   43.27        2.27 (-)
VIX (Mon)    =                 45.84               3.02  (+)
VIX (wk-avg;Jan.5-9) =  40.604         {A potential bottom ; 39 daily}
VIX Normal   =                30  {Best Fit Curve: Trig. function}
Oil (Thurs)     =                $35.51
Oil (Wed)       =              $36.53           
Oil (Tues)    =          $39.21
Oil (Mon)    =          $36.43    

Back to the graphs, after a nice holiday. Understanding graphs is the key to understanding the economy. They beyond anything else show what's actually going on. However, as we see with the above data, historical data appears much different than current data. Daily volatility is smoothed out in the historical focus. As for the VIX, it does not appear to be a predictor of anything. However, that does not mean the VIX is useless. The VIX actually can provide a useful insight into market psychology, and the level predictability of human behavior. That's what the VIX is, a measure (and index) of market uncertainty and fear. We have seen here, that a trend line does not fit here, but a {best fit curve} (a trig function in this case) does. What next needs to be added to our measures, is what always needs to be added to any data measured - accuracy. For example, measured values (in science) are given as the value (plus or minus) a fractional amount of the value (like 10%). At a 10% margin of error, the 30 normal value for the VIX during a presidential administration change would allow for a fractional value of 3 (plus or minus) to normal. Thus any value between 27 and 33 would be considered to be on the normal. The current numbers are not on the normal, or within the margin of error - so it can be said that the market is operating outside of it's normal range for the period.

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