Two Trading Ideas: Go Long Volatility and Short China

Over on our new sister site, we've got a couple of trading ideas you may want to check out:

• With the VIX near 18-month lows, here's a way you can profit from rising volatility
• And Chinese stocks are (still) not looking good - it may be time to punt on a China short

Nothing To See Here - VIX Hits 18-Month Low

Volatility on the S&P is nowhere to be seen these days - perhaps the market crash was merely a figment of our imaginations!

The VIX is low, and it continues to head lower.

(Source: Yahoo Finance)

As you can see from our experience in 2008, when the VIX breaks out, it breaks out in a big way. So a breakout on the VIX would be a good cue for us to start slamming the PANIC button as hard as humanly possible.

But for now, all is calm in the markets, as February's drop now looks like a pebble tossed in the pond in hindsight.

The VIX could continue to head lower - who knows - but one would have to expect a spike in our future again sooner rather than later.

How to Determine a Market's Trend

A guest article and video by Adam Hewison, President, INO.com.

One of the easiest ways to determine the trend in any market is simply to connect the dot's. In this five minute video, I explain how you can connect the dots in any market to determine its trend. I will show you three examples of connecting the dots...

1. How to determine a downtrend.
2. How to determine an uptrend.
3. How to determine when a market is making a change of direction.

One of the key components I look for is how a market closes on a Friday or the last trading day of the week. This is when traders have to decide what they want to do with their positions. It also tells you with a high degree of probability which way the market is headed for the upcoming week. I learned this trading secret on the floor of the exchange in Chicago and it is one I would like to share with you today. I feel that this technique has a lot of validity, particularly in light of today's volatile markets.

Enjoy the Video
http://www.ino.com/info/266/CD3396/&dp=0&l=0&campaignid=3

Editor's Note: A simple yet enlightening video, and I wish I would have connected the dots on Cotton before jumping into this trade too early. I am going to try to start incorporating this technique into my entry criteria for a new trade. This would have saved me at least some of the losses I encountered this summer, by trying to go long markets that were setting lower highs and lower lows.