Panic, smoke and fire

Bill Luby at VixandMore (link):

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the ratio [VIX vs. 10 year T-note yield] is currently at levels seen only during extreme crisis or panic market environments.

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BSC options players (OptionAddict) were sniffing at the bad news and bid up the premiums way up before the news today. With the news, the premiums went to the moon, so high that I was tempted to sell some of the options, but reminded myself of the out sized risks of high premiums. The smoke is now full five-alarm fire, with the possible buyout or take under of BSC as the most likely outcome.

So with the high fear factor, is it time to load the boat on the long side? Especially, if we get a gap down open on Monday, I'll look to take a shot at the long side. The Fed meeting might bring a full point rate cut, and/or more measures like the $200 billion short term loan problem. Watching this, it feels like the Fed is trying to build a sand castle on the edge of a rising high tide. Each massive effort only lasts as long as the intervals between the bad news.

Yes, at some point the tide will turn and the bad or terrible surprises will end and the market will rally for real. As I have written many times, calling bottom is rarely a profitable game (same with calling top). It sure is exciting and fun, but it is difficult and high risk. I prefer something easier with the odds in my favor.