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VIX CBOE Volatility Index

Bring Back the Vol, 3 May 2023🖼 Daily Technical Picture 📈 ➤ Sharp drop in equities accompanied by a spike in the VIX. It seems the market didn't like the taste of abnormal low vol. It wanted things to get back to "normal". As a Trader, "normal" is good although sometimes we end up on the wrong side like today. Bring back the Volatility. ➤ The Strategy did as it should by halving the position size yesterday in anticipation that some level of downside may occur. I cut my long position further today upon another exit signal. My secondary strategy signaled a short trade. Overall I have a small long position going into US Interest Rate Decision/FOMC day. ➤ Before you ask, I have no view on the outcome of the interest rate decision and what may or may not happen. I don't spend much time on those fundamental aspects of the market. There are plenty of talking heads that will offer their opinion but only listen to those people who actually have a wager on the outcome. I wouldn't trust anyone who doesn't have skin in the game. ➤ Conclusion: 🐆 Looking to recoup some losses EQUITY TREND: ⦿ Short-term (weeks) - UP ⦿ Medium-term (< 6 months) - UP ⦿ Long-term (>6 months) - DOWN
AMEX:SPYLong
by mrstockyetoro
GOLD VS VIX -3/5/2023-• Gold is highly benefitting from the fear and uncertainty in the market which is likely to persist • Markets are again assuming a recession coming • Banking sector latest dilemma is adding to the fear sentiment • Rising interest rates, hard landing caused by FED continuous tightening policy along with signs of stagflation all add to the bullish price action seen in the commodities markets • Added the VIX (volatility/fear index) below Gold chart to try and visualize any correlation between them • Interesting to see that peaks in VIX index were usually accompanied by peaks and rallies with the Gold • As we are approaching the all time high at 2070 with price currently just above 2000 I would like to add my own interpretation on that • When Gold traded at 2070, VIX value was around 33 • We are only just above 2000 and the VIX is way lower than the previous higher level • If current factors and sentiment persist in the market, we might see the VIX trading back towards higher levels, sending the Gold way higher than 2070 • Note that VIX is up almost 11% in a single day at the time of writing Traders, if you like this idea please comment and like ✅ Here to answer all your questions, Good luck
TVC:GOLDLong
by RamziAbouAbdallah-CMT
Reversal Time? 2 May 2023🖼 Daily Technical Picture 📈 ➤ An attempt to break above the Feb high fell flat. Literally. Equities ended where it started, slighty down from Friday close. It isn't a good look. ➤ Over the last few days, there has been a deceleration in the up move evidenced by the smaller candle sizes or price bars. It's like a car decelerating towards a known barrier ahead. It isn't confident that it can crash through the barrier or maybe it doesn't want to at all. ➤ I'm not here to question the car or in our case the market why or why not. I am here to best respond to what I can see from a short-term technical trading perspective. I therefore have cut my long position back to a moderate size. The chances for a price reversal is much higher and managing that risk is essential. There is still enough risk on the table to make good profits if the car decides to crash through but the car may indeed decide to go in reverse. ➤ Conclusion: 🐆 Perhaps this prey is too big to take down. EQUITY TREND: ⦿ Short-term (weeks) - UP ⦿ Medium-term (< 6 months) - UP ⦿ Long-term (>6 months) - DOWN
AMEX:SPYLong
by mrstockyetoro
🔥 Another Market Crash Coming? VIX Says YES 🚨The VIX is the volatility index of the SP500. Generally, it trends up during bearish times and trends down during bullish ones. In the past, the VIX has always spiked up during a market bottom. Looking at the chart, we can see that the VIX has not spiked up yet and formed a bottom like it has done in the past. We only have ~30 years of VIX data, but it has still signaled the bottom of every bear market (-20% decline or more) during that time. Assuming that the VIX is correct, there's still a chance that the market hasn't bottomed yet and that the "real" crash is yet to come. What do you think? Is the bottom in? Crash incoming? Share your thoughts🙏
SP:SPXShort
by FieryTrading
13
$SPY - Pivotal Week ⚠️ AMEX:SPY experienced a significant sell-off at the beginning of the past week, followed by a strong bounce near YTD highs. Undeniably, technicals appear bullish due to the strong bounce, particularly with TVC:VIX volatility subdued. However, given the upcoming #FOMC and NASDAQ:AAPL ER, I'm watching for volatility to resist further suppression. This pivotal week will help determine the future price direction. The momentum we saw at the end of the week does not imply a bullish cycle, and it may continue to shake out bears as it crosses the key level around 415. A potential reversal could occur at the YTD high (near 417), especially with FOMC around the corner. This scenario isn't guaranteed, but I would caution on taking long positions at these levels. Watching for higher price discovery to offer a better risk-to-reward setup to ride into sell strength.
AMEX:SPY
by theapearmy
Banish the Bears 4ever (and a summary of other asset classes)🖼 Daily Technical Picture 📈 1 May 2023 ➤ Bullish sentiment drove prices higher once more on the last day of April trade. The momentum is building to take out the Feb high at 418.31 on the SPY. This level is important if looking at the monthly chart. A monthly close above this level will in my opinion bring about the beginnings of a longer term bull market. Will this occur in May? ➤ In the very short-term I am positioned long with maximum position size. Hopefully the bullish momentum will continue and kick start the new month on the right foot. ➤ Let's have a quick overview of other assets: ⦿ USD (daily): Winding sideways. I expect further weakening, 1.13 being the target (EURUSD). ⦿ TLT (weekly): Still range bound. I favour the long-term downtrend meaning higher interest rates. Interest rate decision this week may see prices breakout up. Downtrend remains in place unless price moves above 114. At that level, we indeed may see a change in trend. ⦿ GOLD (daily): Retracing, looks poised to take out the all time high at 2070 ⦿ NATGAS (weekly): Still unable to break above the 2.30 long term resistance zone. It doesn't look strong enough to breach the resistance. Further downside expected. ⦿ OIL (3-day): Bullish move may have peaked. If true, I expect a re-test of the low at a minimum at HKEX:64 (WTI). $64/65 is a multi-year support level. A break below would see much lower prices. ⦿ BTC (weekly): Testing, probing the long-term resistance level at HKEX:30 ,000/31,000. Price can drop further (pick your level) but the new bull trend is firmly in place. ➤ Conclusion: 🐆 The Hunt is on. EQUITY TREND: ⦿ Short-term (weeks) - UP ⦿ Medium-term (< 6 months) - UP ⦿ Long-term (>6 months) - DOWN
AMEX:SPYLong
by mrstockyetoro
Banish the Bears, 28 Apr 2023🖼 Daily Technical Picture 📈 ➤ An aggressive pump higher today in equities, undoing all the Bear's work over the previous days. The Bears are banished...or are they? ➤ It does look like one-way traffic at the moment. The Bulls have control. The only issue I have so far is their inability to close a month beyond the Feb 2023 high. This monthly high close (and there's just one trading day left this month) would in my opinion seal the deal for the long-term Bullish scenario. ➤ If this doesn't happen in April we will have to wait for May...but May is known as the month of "sell and go away". If Bears can hold out for another month, the scales may tip in their favour. ➤ I took profit on my long positions. Unfortunately, my mistake as detailed yesterday diminished what would have been a good pay-day. I hold a small long position. ➤ Conclusion: 🐆 The Hunt was part failure part success. I'm still very hungry. I'm sure my Cubs are too. EQUITY TREND: ⦿ Short-term (weeks) - UP ⦿ Medium-term (< 6 months) - UP ⦿ Long-term (>6 months) - DOWN
AMEX:SPYLong
by mrstockyetoro
Celebrating 50 Years of Equity Options TradingAmid serious pushback, Chicago Board of Options Exchange (CBOE) went live on 26th April 1973. Options are now a standard tool for portfolio risk management. Not so, back then. They were seen as gambling instruments for reckless speculators. Shortly after CBOE launch, Fischer Black, Myron Scholes, and Robert Merton provided a mathematical model for computing options prices. This Nobel Prize winning model allowed options to be priced theoretically for the first time. It was a key driver in making options markets sophisticated, more efficient and much larger. The Black Scholes Merton model ("BSM") forms the fundamental basis of options pricing. It allows traders to compute a theoretical price to options based on the underlying asset’s expected volatility. Expected volatility is referred to as implied volatility (IV). Why implied? Because it is the volatility implied from an options price given other parameters from the BSM model. COMPREHENDING BSM & BLACK76 Options have existed since the 17th Century. Option were limited to speculation and gambling in the absence of a sound and suitable pricing model such as BSM. BSM offers a mathematically sound framework to compute theoretical price of European options using five inputs: 1. Underlying Asset Price 2. Implied Volatility (IV) of the Underlying Asset 3. Interest rates 4. Exercise (Strike) Price of the option 5. Time to expiry A variant of the BSM for pricing options on futures, bond options, and swaptions is the Black Model (also known as Black76) which forms the basis of pricing options on commodity futures. BSM is far from perfect. For starters, it makes unrealistic assumptions. Such as that stock prices follow a log-normal distribution and are continuous. That future volatility is known and remains constant. BSM assumes no transaction costs or taxes, no dividends from the stocks, and a constant risk-free rate. Even though these assumptions are impractical, the BSM provides a useful approximation. In fact, the model is so commonly used that options prices are often quoted as IV. On the assumption that given IV, options price can be computed using BSM. Actual options prices vary from theoretical ones based on supply-demand dynamics and with reality being different from the assumptions baked into BSM. For instance, actual prices for the same expiry and at different strike prices have been observed to have different IV. Primarily given a higher likelihood of a downside plunge relative to upside rally. This difference in IVs across different strikes is referred to as volatility skew. OPTIONS IN SUMMARY Options involve two parties whereby one party acquires a right to buy or sell a pre-agreed fixed quantity of a stock/commodity at a pre-agreed price (the strike or the exercise price) at or before a pre-agreed future date (Expiry Date). One party acquires the right (Option Buyer or Option Holder) and the other party takes on the obligation (Option Seller). In consideration for granting the right, the Option Seller collects a premium (Option Price) from the Option Buyer. To ensure that the Seller keeps up their promise to trade, such Sellers are required to post margins with the Clearing House. Once buyers pay premium upfront, they are not required to post any additional margins with the Clearing House. Where the Option Holder secures a right to buy, it is known as a Call Option. However, if the Option Holder acquires the right to sell, such an option is referred to as Put Option. Where the Option Holder can exercise their right at or before any time before expiry, such Options are referred to as American Options. Options that can be exercised only at expiry are referred to as European Options. While exercising is permitted at expiry, these European options positions can be closed out before expiry by selling out a long position or by buying back a short position. Premiums for European options are typically lower than premiums compared to American options. COMPREHENDING WALLSTREET’S FEAR GUAGE, FADING VIX, AND VIX1D The CBOE Volatility Index (famously referred to as VIX and is also knows as fear gauge) is a real time index measuring the implied volatility of the S&P 500 for the next 30 days based on SPX Index options prices for options expiring in 23 to 37 days. There are a range of financial products based on the VIX index allowing investors to hedge volatility risk in their portfolios. In recent months, VIX has been fading into insignificance. Despite huge price moves in the S&P 500, VIX has remained staid. Why such inertia? Primarily because options markets have started to shift towards shorter expiries. Zero-Days-To-Expiry (0DTE) options now account for more than 40% of overall S&P options market volumes. These very short-dated options allow traders to express views around specific events such as monetary policy meetings and economic releases. Their popularity has increased dramatically over the past few years, with volumes today nearly 4x that of 2020. To account for this shift in market behaviour, the CBOE has launched the VIX1D i.e., the One-Day VIX. This index tracks the expected volatility over the upcoming day as determined by zero-day options prices. More on Options Greeks and Risk Management using Options in a future paper. DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
TVC:VIXEducation
by mintdotfinance
Tricks for Reading the VIXUnderstanding VIX Generally VIX measures the pricing of at-the-money options on the S&P 500 SP:SPX FOREXCOM:SPXUSD where such options have about 30 days until expiration. Higher VIX readings mean that demand for at-the-money options on SPX has risen through hedging or bearish positioning (usually both)—meaning that fear and uncertainty has arisen along with expectations of greater price movement (price declines) and volatility. In essence VIX tends to jump during major sell-offs in the S&P 500 and other global equity indices, and it also tends to fall back during long, gradual rallies. Its historic average is about 20. The average of all VIX closing numbers is about 19.4. Further, a VIX reading at 27–28 is at the upper end of one standard deviation from its mean. At the height of the 2008 recession, VIX peaked around 89.5 (intraday) and closed just above 80 several times. In March 2020 amid the Covid-19 pandemic, it surged to about 82. During the dot-com market from 1997-2000, the VIX held above its historical average (above 20) even though equity markets continued to drive higher for years. This was not a typical period for the relationship between VIX and markets with above average VIX readings coinciding with higher S&P 500 returns (33.1% in 1997, 28.3% in 1998, 20.9% in 1999). Understanding VIX Readings In General, High VIX Readings Help Spot Trading Lows or Lasting Market Bottoms VIX helps spot market bottoms. Some market experts assert that VIX is a measure of stress in the system, a measure of worry and fear as defined by various formulas derived from SPX puts and calls. Readings above 40 on the VIX tend to signal pure panic and indicate either an interim low (e.g., a temporary trading low followed by a bear rally) or a final bottom for a bear market or correction. The VIX measures implied volatility from a basket of at-the-money front-month SPX options. Ordinarily, VIX and SPX are supposed to head in opposite directions , meaning VIX climbs (or remains elevated) as SPX falls, and VIX falls (or remains low) as SPX rises. At least some other global indices that correlate to some extent with SPX would typically head in the same direction as SPX, but since VIX is derived from SPX derivatives (options), SPX will be discussed primarily. So the ordinary relationship between VIX and SPX is inverse as shown in the example on the main chart above for the 2000-2002 bear market. Lower SPX lows often coincide with even higher VIX highs. In the chart below, note how the VIX and SPX held to their usual inverse relationship during the 1998 SPX correction, which involving a decline of about -22% from the pre-correction high. As the market fell, the VIX continued to rise. Each SPX interim low was marked by a higher VIX high. Importantly, each VIX high was a "lower high" relative to the final VIX high that coincided with the final SPX low on October 8, 1998. Supplementary Chart 1: SPX 1998 Correction Shows Usual Relationship between VIX and SPX Divergences from the Usual Inverse Relationship between VIX and SPX May Distinguish Lasting Market Bottoms from Temporary Trading Lows But divergences from the usual inverse relationship between VIX and SPX can sometimes appear, and they may signal a lasting market bottom as distinguished from a temporary trading low . In particular, VIX will start to diverge from the usual pattern of higher VIX highs that coincide with lower VIX lows, meaning that SPX will make a new low but VIX will make a lower high rather than a new and higher high. This can be a helpful trick to understanding how VIX behaves at some major bear market bottoms and corrections. The primary chart above shows an excellent example from the 2000-2002 bear market. Consider the penultimate interim SPX low in July 2002. The highest VIX close of the entire bear market printed at 48.46 the day before this major interim low on July 24, 2002. (On the actual day of this interim low, VIX fell slightly to close at 39.86). Corrections also sometimes show this divergence from the usual SPX-VIX relationship. The chart below shows the 1990 correction in SPX where this equity market fell about -20%. Note the divergence between the major interim low in August 1990 and the final correction low in September 1990. Supplementary Chart 2: SPX 1990 Correction Shows Divergence from the Usual Inverse Relationship between VIX and SPX Although not shown in an additional chart, the bear market of 2008-2009 following the Great Financial Crisis contains another useful case study. During this bear market, the VIX peaked with closing highs above 80 in October 2008 and an intraday high of 89.53 on October 24, 2008. These were the highest VIX readings of the entire bear market occurring months before the final bear-market low. A VIX divergence appeared at the final bear-market low—VIX made a lower high of 49.33 and an intraday high of 51.90 on March 6, 2009. This is similar to the VIX divergence that was seen in the final stages of the 2000-2002 bear market (shown in the chart above). Broader Application of VIX-SPX Divergences This phenomenon of VIX and SPX diverging from their usual inverse relationship also may be stated more broadly as follows: when the VIX moves in tandem with the S&P 500, it’s a usually a sign that the trend may reverse . This occurs whenever VIX and SPX fall together or whenever they rise together. When the VIX and the S&P are both going down in tandem, this could present a good long-term buy signal especially when combined with other technical or fundamental evidence of a bottom. Furthermore this divergence from the usual inverse relationship can appear at market peaks as well. For example, when the market rallies higher, but the VIX remains elevated (it rises, does not decline significantly, and holds support), this indicates the rally could soon fail. A rally with elevated VIX shows persistently higher implied volatility / fear—increased demand for 30-day options based on expected volatility / demand for option hedges as downside insurance. This could be a sign the rally is fleeting.
SP:SPXEducation
by SquishTrade
69
I Made A Boo Boo, 27 Apr 2023🖼 Daily Technical Picture 📈 ➤ At an index level, equities couldn't hang on to early gains and retreated for another day. The price actually closed a minor gap from the previous uptrend as shown by the blue arrows. Note that there is a minor gap higher and a large gap lower from current levels in the SPY. The question is which one will get filled first? Comment below on what you think. ➤ This daily post is generally used to provide observations about the market and price action in pariticular but it also serves as a trading journal for myself. Today marks the first Trading Mistake I've made this year. ➤ I wrongly sized the current trade - double the size it should have been. That is why I cut my positions in half when this was realised. Of course, the Trading Gods have a habit of punishing mistakes to its maximum effect by taking that partial loss at the lows of the day! Unfortunately, I'm not alone with Copiers suffering the same fate. Sorry. ➤ Trading mistakes are part of the game. I accept that. The real issue here is that I didn't recognise the error straight away. I have now put in place a procedure to mitigate this from occurring again. ➤ Conclusion: 🐆 The consolation is that it was a surface scratch and not a deep wound. EQUITY TREND: ⦿ Short-term (weeks) - UP ⦿ Medium-term (< 6 months) - UP ⦿ Long-term (>6 months) - DOWN
AMEX:SPYLong
by mrstockyetoro
VXX points to volatility returning quick and fastWatching the VXX, the VIX ETN, can be quite interesting. It has its own idiosyncrasies, but over the VIX index, this ETN has volume data and charts better than the index on patterns, break outs and break downs. It appears that there has been a bullish divergence of the technical indicators particularly the VolDiv, and less so on the MACD. Nonetheless, it is clearly observed. Recently, a breakdown out of a range support appeared to fake out the market, particularly when yesterday's candle is rather full, bullish an broke back into the range. Furthermore, the TD Buy Setup ended and overextended... just waiting for that TD Flip. Taken together, the short of this (pun not intended) is that volatility is due to return with a vengeance at least to the upper end of the range for a start. Heads up!
CBOE:VXXLong
by Auguraltrader
1
Pretty Ugly, 26 Apr 2023🖼 Daily Technical Picture 📈 ➤ From sitting pretty to pretty ugly. Today's price action has upended the bullish thesis that I was building. However, one ugly day doesn't mean things will now completely reverse. We need two days...OK, I'm just kidding. But on a serious note, the balance of power between the Bulls and Bears have seriously swung towards the Bears. ➤ In after-hours, GOOGL and MSFT stock are being heavily supported post earnings release. Let's see if this can hold up on Wednesday in particular at a broader market/index level. Note that AMZN and META also release earnings this week Wed/Thu (but after market close). ➤ Clearly, the Regional Bank crisis is on-going with FRC in the spotlight. This may re-spark conditions that was experienced during the SVB phase of the crisis. ➤ I got a very short-term buy signal and that was executed dutifully. I am now moderately long and looking for a quick bounce. ➤ Conclusion: 🐆 Pounced. A successful or failed hunt? We will know soon. EQUITY TREND: ⦿ Short-term (weeks) - UP ⦿ Medium-term (< 6 months) - UP ⦿ Long-term (>6 months) - DOWN
AMEX:SPYLong
by mrstockyetoro
Market Analysis: The Coming RecessionIn this post, I will present a market analysis with a focus on recession metrics and indicators. Right now, many of them are sending a recession warning. Home Prices - U.S. home prices are surging higher at the fastest quarterly rate of change on record. (See chart below) This extreme rate of change in home prices is occurring as U.S. 30-year fixed mortgage rates also explode higher at nearly the fastest quarterly rate of change on record. (See chart below) Additionally, we see in the chart below that 30-year fixed mortgage rates have potentially broken out into a new uptrend on the longer timeframes. The best way to detect trend reversals is by using the Ichimoku Cloud. When the price closes above or below the cloud (the shaded area) it is considered to have "pierced" the cloud. Once the cloud is pierced to the upside, resistance becomes support. In this case, assuming the piercing sustains, we can see a sustained period of higher interest rates on 30-year fixed mortgages. Exploding home prices and exploding mortgage rates occurring simultaneously is unsustainable. Examine the yearly chart of U.S. home prices below and notice the similarities between 2005 and 2022. Notice that the Stochastic RSI is extended to the upside, and that home price extends above the upper Bollinger Band. Looking at this chart one could reasonably conclude that in the coming years home prices are likely to revert to the mean (orange line), as they did during the Great Recession. Many analysts try to contradict what this chart is suggesting by claiming that we are in much better shape now than during the sub-prime mortgage crisis prior to the Great Recession. But are we really? With spiraling inflation, every mortgage holder suddenly becomes relatively more sub-prime. We also did not see mortgage rates explode then as quickly as they are now. Unemployment - Analysts point out that the current low unemployment is a reason to believe a recession can be averted. But under the surface, that's beginning to change in a hurry. Below is a chart of most leading unemployment data published by the Federal Reserve: Seasonally Adjusted Initial Claims (Weekly). In this chart, we see that in about a period of the past 4 months, the amount of new unemployment claims has risen by around 100,000 or about a 50% increase. Compare this to the chart from the 2007-2008, when the U.S. economy was beginning to enter a recession (the shaded area represents where the recession began): In the period leading up to the Great Recession, we saw a rise of about 50,000 new unemployment claims or about a 15% increase over a similar 4-month period. Therefore, the rate of increase of initial unemployment claims (both in real numbers as a percentage) is higher now than when we entered the Great Recession. Perhaps more worrisome is the difference in how accommodative the Federal Reserve was in response to rising unemployment. Here is how the Fed Funds Rate changed as unemployment began to rise in late 2007 into 2008: As unemployment was rising, the Federal Reserve began to cut interest rates. Compare this to the current situation in the below chart which shows the Federal Reserve raising interest while unemployment is rising. This change in context is reflective of both the fact that the Federal Reserve is behind the curve with containing inflation and the fact that the Federal Reserve is prioritizing the current problem (inflation) at the expense of the future problem (unemployment). We are experiencing a macroeconomic situation whereby rapidly rising initial unemployment claims are being paired with rapidly rising interest rates. This combination is unlikely to end with any other outcome than a recession. For more details on unemployment data see here: www.dol.gov To interact with the initial unemployment claims data on a weekly basis you can go here: fred.stlouisfed.org Yield Curve Inversion - The 10-year minus the 2-year Treasury yield is used to detect an impending recession. When the 2-year yield rises above the 10-year yield that creates a yield curve inversion, which can often indicate that a recession is coming. Right now the yield curve inversion is very steep. In fact, just recently, the yield curve inversion actually steepened to a level that was even worse than what we saw before the Great Recession. Perhaps most alarming are the rates of change in interest rates. Look at the 10-year yield Rate of Change on a 3-month basis: Here's the 2-year yield rate of change: The federal reserve uses the 10-year minus the 3-month as a more reliable indicator for detecting an impending recession than the 10-year minus the 2-year. However, the rate of change for the 10-year yield has been so parabolic to the upside that the 3-month yield has been struggling to invert relative to it. However, that may soon change. Here's the 10-year minus the 3-month yield chart: Volatility - As you know, volatility is measured by the VIX. The yearly Stochastic RSI for the VIX is trending upward, signally the potential for greater volatility now and throughout the years ahead. This part is a little confusing, but try to follow if you can: Volatility of volatility is measured by the VVIX and is considered a leading indicator of the VIX. Currently, the VVIX is so suppressed to downside that the K value of the Stochastic RSI oscilator has reached zero for only the second time ever. (The first and only other time this has happened was in 2008). While this may be more coincidental than predictive, it nonetheless suggests that volatility of volatility has nowhere to go but up. See below. Margin - Margin has already unwinded both in real numbers and as a percentage by a magnitude that is consistent with, and usually only occurs during, a recession. See chart below. Credit to Yardeni Research, Inc. You can view their full report here: www.yardeni.com Stock Market - Several bellwethers in the stock market are showing that, while we may have a robust rebound from extremely oversold levels in the short term, the longer timeframes look quite bearish, especially for the interest rate-sensitive tech and growth sectors. For more details, here is my analysis on the QQQ/SPY relative performance: Tech and growth are not alone in the bearish context. Indeed, the bull run from the end of the Great Recession to the current period has been characterized by increasing prices but decreasing volume. This is generally bearish, and may reflect that quantitative easing was a large cause of the bull run. Now, quantitative easing is ending in the face of spiraling inflation. Other Metrics - There are many other metrics that are used to detect recessions (e.g. GDP, PMI, M2V). Some may even look toward shifts in demographic trends, rising geopolitical tensions, declining globalization and climate change as recessionary factors. While I cannot discuss every possible metric, one last metric worth considering is the corporate bond market. In 2020, during the COVID-19 shutdown, in order to stabilize markets, the Federal Reserve rushed in to save corporate bonds from crashing fearing that high borrowing costs for corporations could cause liquidity issues. Corporate liquidity issues can cause a whole host of issues from bankruptcies to layoffs. Currently, however, corporate bond prices have fallen to nearly that of the COVID low when the Federal Reserve rushed in to buy, yet the Federal Reserve is only just beginning quantitative tightening and just now beginning to roll bonds off its balance sheet. Finally, I will leave you with this note: The time-tested winning strategy is to continue contributing as much as possible to your retirement fund. If the stock market crashes, do not stop or lower your contributions or try to pull money out because you think the world will end. Rather, continue to contribute as much as you can afford no matter what to a retirement mutual fund with diversified holdings. Contributions during market downturns will buy you more shares of your retirement mutual fund relative to the number of shares your contributions bought prior to the market crash. When price rebounds (and it will) you would have been glad to stick to this investment strategy.
ECONOMICS:USSFHP
by SpyMasterTrades
121
Sitting Pretty, 25 Apr 2023🖼 Daily Technical Picture 📈 ➤ Equities is proof that the world is flat. Flat and dull. I'm kidding, that's just Singapore. Although just after US market close I felt a light shake of the building evidenced by the swaying window blinds. I believe that was the tremor caused by a large earthquake off Indonesia. That was pretty much all the "excitement" for the day. ➤ I'm of the strong opinion that this flat and dull inactivity is a show that the Bulls are sitting pretty awaitng the next leg higher. Why are they taking a time-out? Probably to suck in as many shorts as possible to load up on their positions. ➤ I currently hold a small long position. ➤ Conclusion: 🐆 Ready to pounce. EQUITY TREND: ⦿ Short-term (weeks) - UP ⦿ Medium-term (< 6 months) - UP ⦿ Long-term (>6 months) - DOWN
AMEX:SPYLong
by mrstockyetoro
The Chop, 24 Apr 2023🖼 Daily Technical Picture 📈 ➤ Equities finished flat to down once more. Recent movement has been very low volatility as reflected by the VIX. I still favour further upside as price is well supported at these levels. ➤ That being said, my primary trading strategy did signal an exit and that was executed at end of Friday trade. An exit doesn't mean I am expecting to reverse and go Short. It just means the current trade has run its course. I still hold a long position with 20% of capital due to my secondary trading strategy. ➤ Let's have a quick overview of other assets: ⦿ USD (daily): Similar to the equity market, experiencing a small retracement. I expect further weakening, 1.13 being the target (EURUSD). ⦿ TLT (weekly): Still range bound. I favour the long-term downtrend meaning higher interest rates. ⦿ GOLD (daily): Also retracing but I expect all time highs. ⦿ NATGAS (weekly): Bounced higher to the 2.30 long term resistance zone. It doesn't look strong enough to breach the resistance. Further downside expected. ⦿ OIL (3-day): Bullish move may have peaked. If true, I expect a re-test of the low at a minimum at HKEX:64 (WTI) ⦿ BTC (weekly): As expected, we saw some profit taking. Price can drop further (pick your level) but the new bull trend is firmly in place. ➤ Conclusion: 🐆 Awaiting the next Primary trade signal... EQUITY TREND: ⦿ Short-term (weeks) - UP ⦿ Medium-term (< 6 months) - UP ⦿ Long-term (>6 months) - DOWN
AMEX:SPYLong
by mrstockyetoro
In Bitcoin You Trust?I keep hearing an awful lot about bitcoin is the future, that bitcoin will skyrocket to $100,000 which makes no sense because they fail to realize the amount of money that would take. I wonder where the money comes from...? In this chart, I will give my take on Bitcoin and where I see it going. If I am wrong, I gladly accept it but I highly doubt that I will be. Let's start where it begins: Bitcoin 2017 In December 2017, Bitcoin futures were now offered and part of the market thanks to CBOE . As you can tell, in early 2018, up to Dec 2018 bitcoin wasn't following the equities market until 2019 where we see the Nasdaq rising consecutively from Feb 2019 until July 2019. In that same period we also see Bitcoin rallying. It isn't until March 2020 where we see the truth. Bitcoin crash as the same time as the markets did, and in fact it lead in terms of percentage lost, it was the worst performing asset. Quantitative Easing March 2020 saw the beginning of QE4, where the Fed started throwing money at everything. Hence the parabolic rise in the stock market, setting new all time highs.... during a PANDEMIC & RECESSION. Make sense? Not at all. The Fed is solely responsible for the markets rallying. Period. Ironic that at the same time the Equities market rises, Bitcoin also rallies. Quantitative Tightening In Nov, 2021, the Fed announced that QE had done its job (creating the biggest bubble ever) and now stated they were going to ease, and reduce their balance sheet . Well, as we saw, the Nasdaq AND Bitcoin peaked in November 2021 and started crashing significantly. Once again, Bitcoin was the leading loser and worst performing asset. 2023 Rally Explained Now, investors are looking at Bitcoin rising from $16,000 to now $28,000 and saying this the beginning of a bull market. But, once again, with a little digging we see that stocks and bitcoin are rising because...... The Fed Balance sheet skyrocketed during the March banking crisis. Stocks were crashing but in came the Plunge Protection Team, saved the day by pumping the dying toxic stock market. The stock market is like a nice looking car, but under the hood and on the inside, it's all old, worn, broken, missing the engine, torn up and abused. The stock market does not reflect the economy, because if it did, the markets would be down 50% at least. If you need a visual aid, search S&P500 vs Fed Balance Sheet Conclusion and Key Take Away's - Bitcoin follows the market, no doubt. - Bitcoin benefitted from QE - Bitcoin is NOT a safe haven, and in fact is -the worst asset to hold during turmoil. - Bitcoin , like the equities market is manipulated and controlled. So, where do I see Bitcoin going? I see it collapsing when the markets collapse. The markets can not hide the absolutely horrible economic data much longer. If this was 2008, based on this data coming out, markets would be far passed a correction. The ONLY thing holding this market up is the Fed and it'll continue to do so for a little more until it slips their control. So, if the stock market collapses and if we clearly see that Bitcoin follows the stock market to a T, than what does this mean for crypto when markets fall? It will once more collapse and be the worst performing asset when it does fall. Smart money is going into gold and silver . Everyone else believes in crypto as a safe-haven, yet clearly have not done simple due diligence to see that not only is it not a safe haven, but between commodities , stocks, and treasuries, crypto is absolute worst asset to own. The $30 trillion dollar QE charade bubble is about to explode and there is nothing anyone can do to stop it. The data is getting worse. The consumer debt is at record highs and savings are at record lows. Retail isn't coming back. Discretionary spending is down significantly. Demand has collapsed. ISM crashed. Manufacturing crashing. Housing is crashing faster and steeper than in 2008. Autos down significantly. Inventories are down to March 2020 lows. Orders are being cancelled. Layoffs are rising faster than in the last 3 years. The writing is on the wall folks, they can't hide this much longer. The greed will give way to financial pain. Benefit from BTC crash? Absolutely. Look into BITI and go from there ;)
CME:BTC1!Short
by WorldEconomics
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