Our 50% Volatility Trade, Part II

[SIZE=2]By Tom Dyson [SIZE=2] On November 13, 2008, the Dow Jones logged its fourth-biggest daily gain in the stock market since World War II... It closed up 6.7%. The highlight of the day was the 12.5% rally in the afternoon that erased a 4% morning decline. The next day, the market fell 5%, recovered all its losses by midday, and then fell 5% again. [/SIZE][/SIZE][SIZE=2][SIZE=2]If you believe, as I do, that America has entered a new era of government manipulation, instability, and economic turmoil, then going forward, we should expect to see more days like November 13 and much higher levels of stock-market volatility... In my last DailyWealth column, I ran a chart of the Volatility Index (aka the VIX), showing how volatility moves in clear trends lasting six years or more. Here's that long-term chart of the VIX again. This time, I've drawn support and resistance lines based on the action in the last period of turbulence, from 1997 to 2003. ...