STRESS LEADS TO BAD DECISIONS

Are you feeling stressed? If you are not, then you are super-human, non-human or just not paying attention.

Are you bearish? Are you fearful? Are you angry about your wealth, as measured in dollars on your account statement? Are you feeling helpless? Are you blaming anyone else for what is happening to you, to us or to the market?

OR

Are you thankful that there is a market? Are you thankful that there are opportunities to buy and to sell? If you don't get a good opportunity to BUY (like now) then you are probably used to normal opportunities to buy (like we've seen for four years from 2004-2008).

Just addressing a key point first - our emotions.

Why?

VIX hit over 80 today. Why is that so amazing? It shows people have NO IDEA what is going on because they have NO MONEY to back up their opinion with an order in the market.

VIX is a measure of the readiness, willingness and ability of INSURANCE underwriters to take a stand in the market. When they are not R,W & A to provide insurance, the price of insurance SKYROCKETS as it has now. This is the same as it was after 9/11 for commercial real estate.

We all know what happened to the price of real estate AFTER 9/11 in 2001. But had you read the history books, you would have thought differently. In other words, the price of "insurance on real estate in 2001 was extremely high" and that ended up marking the bottom for real estate.

The one obvious observation is that the price of "insurance" hasn't come down yet. The Gov't had to step in back then to backstop the insurance so that companies would underwrite it. So, we could still theoretically get to the VIX was had in 1987's crash where we hit 160 on the index.

So, we are EXTREMELY HIGH now, but it is not AT THE EXTREME because, the only way we know we have hit the EXTREME is for prices to back away from that high level.

For now, VIX is 77.82 as I type. The high was 81.12. So, I can say with confidence that this is a time to BUY because VIX is below its highest level of 81.12 at its current reading of 77.51. AND prices for stocks are ABOVE their lowest levels of the day 85.57 last on DIA (versus a low of 82.09). Add into this mix a sharply rising price of VIX and activity heavily dominated by PUT volumes today and that means that people have been BUYING PUT INSURANCE all day today.

Are these smart buyers of insurance? Do they know something that we don't? We'll find out soon enough. If they do know something in advance, perhaps that there are massive sell orders to hit the market later today, then we'll see stock prices begin to fall and we should step out of the way. IF they are wrong and they are not all-knowing and aware of something we aren't, then we have a very tradable BOTTOM in stock prices here.

A LONG DESCRIPTION BUT AN IMPORTANT ONE!

BUY SIGNAL - 85.79 BID in DIA

RISK 1.00 PT.

RAISE STOP BY 0.50 AFTER 30 MINUTES.

RAISE STOP TO BREAKEVEN AFTER 60 MINUTES.

EXIT AT THE 4PM CLOSE