Volatility, here we come — VIX to 60

By Peter Brandt

This week will be a slug fest. The markets to be experienced this week will be no place for the timid.
Starting this afternoon the big guns will be out to play. Anticipating the markets, I feel like an ant among elephants. I am not sure what to expect — besides incredible volatility.
Huge, I mean HUGE, money will be coming out of chute betting that the Dow will not immediately leave a downward gap of 200+ points. The chart below shows where the DJIA will open based on Monday’s electronic trading.
 This buying will be done by massive hedge funds defending their portfolios, algo traders, Wall Street trading operations, large specs, Bernanke and the Fed and little Timmy Geithner. The money that will be thrown at the long side will be massive. No place for children to play! If you are late to the game getting short, you need to know that your opponents are capable to inflict great pain. I have some good trading friends, people I REALLY respect, who are betting against me. I don’t take it personally. They are taking trades consistent with the way they have made a lot of money over the years. And I don’t worry about them because I know they are great risk managers.
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