Double Witching Friday: Will the stock markets hold? UPDATE

This is the question of the day and many are nervous it won't. There isn't much data to point to, to answer that question. The only data I could bring forth today, as a piece of encouragement, was that the VIX Volatility Index closed at 47.08, down 1.38, as it still stays under 50. When the Volatility Index comes down it doesn't mean that markets will go up, it just means that people aren't panicking and selling like a mob, they are much more calm about it.

This latest market drop, back to the November lows, looks well managed, in my view. The daily moves are modest and not like what it was like when we first reached the lows, back in November, when the VIX was between 70 and 80. I tend to think it is Wall Street wanting to send a message to the politicians in DC that they don't like what the Obama Administration is doing to solve the Credit crisis, the Mortgage crisis nor the Stimulus package. The problem with this point of view is all those voices have come up with no new ideas other than reducing taxes. It is the only action most right wing Republicans can come up with.

So I still believe we are going to hold around this current level. We may go as low as 7,200 on the Dow, When I first put the chart together projecting the lows of about 7,300 when no one thought we were ever going that low, I also said it could go to 7,200. The reason for the discrepancy was that the uptrend line which I constructed and analyzed started from about 1975 to the mid 1980's. I did not enter all the data in a spread sheet and use an equation to determine best fitting line. I used existing charts for the period of 1970 to September of 2008 and drew a line that while imprecise hit at around 7,200 to 7,300. So when I said we will hold, I really believe we will. We just need to get through today rightfully labeled "Double Witching" for this month's Options expiration. It will be a measured test not a panic drop but the shorts want to extract every penny they can from these lows. Keep the faith!

UPDATE: 8:45am PST.

Well we have gotten as low as 7,311 today and still appear to be holding, and the S&P 500 has gone as low as only 762, which is also good news. The VIX has risen to as high as 50.36 but went back below 50 again.

UPDATE: 10:00am PST.
I wanted my readers to know what I am currently doing. I have just purchased additional shares of the ETF Ultra Long of the S&P 500, symbol SSO for $18.48/share and also purchased additional shares of the other ETF I own, symbol TNA, for $17.49/share.

The VIX is now up over 51 and the Dow is down to 7260.