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VIX CBOE Volatility Index

VIX - idea is still clear2008 didn't repeat 1:1, but history tend to rhyme - and so it is doing right now. VIX dropped lower than it should - very likely manipulation - but is holding a certain level - when I checked for any curve that could be adjusted to it - I noticed a small detail - 2021 fakeout. 2021 was the last push to the upside - the one that broke VIX trend - but now is holding to it once again. The channel is now clear and we are at the bottom of it. Not bullish at all for stocks. Vix likely to bounce up soon.
TVC:VIXLong
by TheSecretsOfTrading
Forget the "Santa rally"Forget the "Santa rally," it's time to brace ourselves for a potentially tumultuous 2023 as concerns mount over bond market developments and their impact on Q1 earnings Santa is tired, Kids It is uncertain whether the annual "Santa rally" will occur in 2022 due to the bear market. There are concerns about the recent developments in the bond market and their potential impact on Q1 2023 earnings. Some stocks, such as Amazon, have approached their 2020 lows, which raises the possibility of a "sell the rumor, buy the fact" situation. In the past, when the NASDAQ has experienced a 20% annual drop, negative consequences have followed in subsequent years, with particularly poor performance in the first year. The 10-year treasury yields have reached their highest levels since November and the Federal Reserve may be unable to provide support as it did in 2008, putting portfolios at risk in the coming year. Most strategists expect market prices to remain around current levels by the end of the year, though some have forecasted SPX values of 3400, 3650, and 3725. A shooting star-style weekly candle on the Bond market has signaled potential significant drops in the S&P 500, ranging from 18-20%. There has been a rotation in market performance in the past month, with sectors such as energy, utilities, financials, staples, healthcare, and defensive stocks performing well, while semiconductors, tech, consumer discretionary, clean energy, and solar have struggled. This trend, known as stagflation, has also been reflected in the performance of assets like gold and the GDX. Valuation compression has also been observed in the market, particularly in the clean energy sector. The VIX, or volatility index, has reached levels similar to those seen during the Global Financial Crisis, raising concerns about a potential fear-driven market in 2023. The U.S. two-year yield and 10-year yield have also risen, with the potential for inflation to increase due to recent Covid outbreaks and supply chain disruptions. The high yield market has weakened, with the rejection of topping islands and a deviation from the usual two. Hairy Bonds Why is the bond market like a box of chocolates? You never know what you're gonna get! Bonds have recently experienced a sharp decline, largely due to expectations for the federal funds rate and the potential for further COVID-19 lockdowns. This is also contributing to concerns about inflation and the ability of the Federal Reserve to effectively combat it. As a result, the performance of bonds has been impacted, as they tend to do better in environments with rate cuts. The Federal Reserve's slower pace of cuts suggests it may take longer to support the economy and potentially puts additional pressure on economic fundamentals and company valuations. The S&P 500 has seen significant losses on specific days in 2022, including September 13th, May 18th, June 13th, April 29th, and May 5th. These days have resulted in drastic percentage moves, with some as high as 4.3%. In the past month, there has been a rotation in market performance, with sectors such as energy, utilities, financials, staples, healthcare, and defensive stocks performing well, while semiconductors, tech, consumer discretionary, clean energy, and solar have struggled. This trend, known as stagflation, has also been reflected in the performance of assets like gold and the GDX. Valuation compression, or a decrease in the price-to-earnings ratio, has also been observed in the market, particularly in the clean energy sector. It is important to continue monitoring key levels and considering the potential impact on portfolios. Yield those Funds FUN FUNDS! The Federal Funds rate, also known as the benchmark interest rate, is the rate at which banks lend and borrow overnight funds from each other to meet their reserve requirements. It is set by the Federal Reserve, the central banking system of the United States, and is used as a tool to achieve its monetary policy objectives. Over the past two decades, the Federal Funds rate has had a significant impact on the stock market, particularly the S&P 500 index (SPX). In general, changes in the Federal Funds rate can affect the stock market in a number of ways, including through the cost of borrowing, the level of economic growth, and investor sentiment. During the early 2000s, the Federal Reserve implemented a series of interest rate cuts in response to the dot-com bubble and the 9/11 terrorist attacks, which helped to boost the stock market. The SPX reached an all-time high in 2007, just before the onset of the global financial crisis. In response to the crisis, the Federal Reserve implemented a series of aggressive interest rate cuts, which helped to stabilize the market and contribute to the recovery of the SPX. Since the recovery from the financial crisis, the Federal Reserve has generally maintained a low interest rate environment, with the Federal Funds rate hovering around 0%. This has been supportive of the stock market, as low interest rates can make stocks more attractive to investors by reducing the opportunity cost of investing in stocks relative to other asset classes. However, as the economy has improved and the stock market has reached new highs, the Federal Reserve has begun to gradually increase the Federal Funds rate. While the impact of these increases on the stock market has been relatively limited so far, some analysts have raised concerns that further increases could lead to a slowdown in the market. Currently, in 2022 leading into 2023, there are no signs yet of the Federal Reserve cutting or tapering rates as the market continues to decline, marking a period of demand destruction. This suggests that the Federal Reserve may be hesitant to use monetary policy as a tool to support the market in the current environment. Instead, the Federal Reserve may be looking to continue rate hikes towards 2000 or 2008 levels. See chart In addition: also see Interesting Inflation! The "Interesting Inflation" indicator is a technical analysis tool that is designed to provide traders with information about the rate of inflation in the United States. It is designed to work on monthly charts and uses data from the Consumer Price Index (CPI) to calculate the average rate of inflation over a specified period of time. On the chart, the light blue to orange line represents the average rate of inflation, while the dark blue line represents the trend in the inflation rate for the month of December. The green line represents U.S. interest rates. The indicator includes a number of inputs, including a toggle to show the inflation rate for the month of December and a setting to enable or disable the display of U.S. interest rates. It also includes a number of plots, including plots for the U.S. inflation rate and U.S. interest rates. To use the "Interesting Inflation" indicator, traders can simply add it to their chart and adjust the input settings as desired. The indicator will then display the average rate of inflation and, if enabled, the U.S. interest rates on the chart. Traders can use this information to understand the current inflation environment and to make informed decisions about their trades. In addition to the average rate of inflation, the "Interesting Inflation" indicator also includes a plot for the inflation rate in the month of December. This can be useful for traders who are interested in understanding the trend in inflation over the course of the year and how it may affect the market. In November 2022, the United States saw a 7.1% increase in prices compared to the previous year, according to the monthly consumer price index (CPI) for goods and services. The CPI, which measures the rate of inflation, shows the percentage change in the price of a basket of goods and services over time. Inflation in the United States has been particularly high in 2022 due to the COVID-19 pandemic, supply chain issues, and the Russian invasion of Ukraine. The annual inflation rate in the United States has risen from 3.2% in 2011 to 8.3% in 2022, indicating a decrease in the purchasing power of the U.S. dollar. According to data from the International Monetary Fund, the U.S. CPI was approximately 258.84 in 2020 and is expected to reach 325.6 by 2027, compared to the base period from 1982 to 1984. In November 2022, the monthly percentage change in the CPI for urban consumers in the United States was 0.1% compared to the previous month. Inflation is a significant economic indicator and is being closely watched in countries around the world. Brazil saw an inflation rate of 8.3% in 2021 compared to the previous year, while China's rate stood at 0.85%. Like a Bottle! The yield curve represented in blue on the bottom is the graphical representation of the relationship between bond yields and their corresponding maturities. In general, long-term bonds tend to have higher yields than short-term bonds, as investors demand a higher return to compensate for the additional risk associated with tying up their money for a longer period of time. This results in a normal yield curve, where long-term yields are higher than short-term yields. However, in some cases, the yield curve may become inverted, with short-term yields exceeding long-term yields. This can occur when investors are concerned about the future outlook for the economy and are willing to accept lower returns on long-term bonds in exchange for the added security of a shorter investment horizon. One specific aspect of the yield curve that is often monitored is the spread between the 10-year and 2-year yields. When the 10-year yield is lower than the 2-year yield, it is known as a yield curve inversion. A yield curve inversion is often viewed as a bearish sign for the stock market, as it can indicate that investors are concerned about the economic outlook and are becoming more risk-averse. Historically, yield curve inversions have preceded recessions and bear markets, as investors become less willing to take on risk and demand safer, lower-yielding investments. As a result, a yield curve inversion can be an important signal for traders to consider when evaluating market conditions and making investment decisions. One historical example of a yield curve inversion preceding a market crash is the global financial crisis of 2008. In early 2007, the yield curve inverted, with the yield on the 10-year Treasury bond falling below the yield on the 2-year Treasury bond. This was a clear warning sign that investors were becoming increasingly concerned about the economic outlook and were seeking out safer, shorter-term investments. As the year progressed, the financial crisis deepened, with the housing market collapsing and major financial institutions experiencing significant losses. The stock market, as measured by the S&P 500 index, reached its peak in October 2007 and then began a steep decline, eventually bottoming out in March 2009. The yield curve inversion was just one factor contributing to the financial crisis and market crash, but it was an important warning sign that investors should have paid attention since it is currently inverted, which has historically preceded a recession within the next two years. However, the size of the inversion does not necessarily determine the severity of the recession. While the current inversion is larger than previous ones, it does not necessarily mean that the upcoming recession will be worse. In addition, the stock market's recent behavior is not indicative of a burst bubble, meaning that the potential decline in the market during the recession may not be as severe as previous ones It's worth what you pay for it In the first quarter of 2023, earnings will be in focus for the market. The recent sell-off in stocks, particularly those such as Amazon that have almost reached 2020 lows, has raised concerns about what will happen next. The 10-year Treasury yields have risen to their highest levels since November, which could indicate a longer period for the Federal Reserve to combat inflation and support the economy. These factors, along with the high rates of Covid outbreaks and the potential for stagflation, have contributed to the rotations seen in the market, with energy, utilities, financials, staples, healthcare, and other inflation plays performing well, while semiconductors, tech, consumer discretionary, clean energy, and solar have struggled. The VIX, or volatility index, has also reached levels similar to those seen during the Global Financial Crisis, raising concerns about a potential fear-driven market in 2023. The U.S. two-year yield and 10-year yield have also risen, with the potential for inflation to increase due to the recent Covid outbreaks and supply chain disruptions. The high yield market has also weakened, with the rejection of topping islands and a deviation from the usual two to one ratio with the S&P 500. These factors could all impact market performance in the coming year. Fearing Futures The US dollar futures are currently looking strong, with indications of accumulation in the market. This is supported by the recent closure of nice wick rejections off the lows and a move above 104. The two-hour chart shows evidence of accumulation at this point, with a critical bottom and big rejections at a certain level, as well as a double bottom formation. If the market breaks above 104, there is potential for a bigger trade to reach 107. Despite negative sentiment towards the US dollar recently, most trend lines show a break through. It is important to note that a strengthening US dollar may not be positive for the US stock market. Gold has been exhibiting a series of higher lows and has broken to a new high. However, it is important to be cautious when trading gold at this time of year due to large spreads and illiquidity. Gold is currently rejecting these levels and it is important to monitor the weekly chart for any potential break and close above a certain price, which could lead to a drop met by strong demand. Oil stopped at 81 and has fallen off, with wick rejections in the 81-82 range. The two-hour chart for oil is difficult to interpret at this time, with no new lows. It is important to monitor the market for a break below a certain price, which could indicate a potential move to the downside. King Elon, the Musk The performance of Tesla (TSLA) has been a key focus in recent market analysis. According to the provided text, TSLA has recently moved above the 104 level, indicating some form of accumulation in the market. This is supported by the presence of "nice Wick rejections" at this level and the establishment of a new high, followed by a pullback to the 618 Fibonacci level where buyers were found again. While sentiment towards the US dollar has been negative, the trend lines suggest that the currency may continue to strengthen, which may not be positive for the US stock market as a whole. However, TSLA's performance may not be directly impacted by this trend. Instead, the focus is on whether TSLA can break above the 104 level and potentially reach a bigger trade with a target of 107. It is recommended to buy dips in TSLA at this time, although caution is advised due to the potential for large spreads and illiquidity in the market around the new year. Overall, the performance of TSLA will be closely watched in the coming week, as key indicators such as long leg doji candles suggest indecision or equilibrium in the market. It is important to exercise patience and react to developments rather than attempting to predict them, as the market for TSLA may be challenging to trade in the short term. The Tesla stock price has experienced significant volatility recently, with the stock reaching new highs and then falling off. This has resulted in many traders experiencing stop loss triggers and margin calls. The market has been bearish on tech stocks, particularly those with high valuations, and this has weighed on the overall market. It remains to be seen how the market will react to Q1 earnings, but it is expected to be a significant event that could impact the direction of the market. In the meantime, traders should keep an eye on key levels and be prepared for potential volatility. Weighing a Giant Apple's weekly close is significant because if it goes below the low formed in June, it may indicate that the biggest stock in the world is facing significant headwinds. There may be rallies, but they may be sold due to the stock approaching key levels. The Gap close for Apple is also relevant to Amazon, which is approaching its 2020 low at around 81.33. This may cause some buyers to recommit and trigger a lot of sell signals, as well as margin a lot of people's stop losses. Semiconductors have continuously sold off due to concerns about valuations and the impact on tech stocks, particularly in the market. It is possible that this could be due to selling rumors ahead of Q1 earnings. The Dax has been more technical and has sold off after reaching a resistance level. If the market trends sideways over the next few days, it may trap options money. The US30 has held up relatively well, but it has not yet reached a new high above 33,000. There may be gaps left behind in the area between 32,500 and 33,000. The US500 has formed a bearish flag and may test its 200-day moving average. If it breaks down from this pattern, it may indicate that the market is heading lower. The Nasdaq has been underperforming and may test its 50-day moving average. The Russell 2000 has been lagging and may test its 50-day moving average. The US dollar has been in a range and may test its 200-day moving average. Gold has formed a bearish flag and may test its 200-day moving average. Oil has formed a bearish flag and may test its 50-day moving average. The 20th is a significant options expiration date with almost 5 million units, and there is a large number of puts stacked compared to calls. This may indicate that the market may rally initially and then sell off later. Bitcoin has pulled back to a key level and needs to rally through 17,000 again to potentially reach 17,500 to 17,600. However, the current outlook is negative and there is a potential for it to go lower. The market trend has been for rallies to be met with sell demand due to risk-on and risk-off assets, with Bitcoin being a risky asset. In general, it is expected to trade between $9.5k and $11.5k See charts: TLDR Bond market developments and their potential impact on Q1 2023 earnings Santa rally may not occur in 2022 due to bear market Some stocks, such as Amazon, approaching 2020 lows NASDAQ has experienced 20% annual drop in past, negative consequences in subsequent years 10-year treasury yields at highest levels since November, Federal Reserve may not provide support Market prices expected to remain around current levels by end of year, some S&P predictions of 3400, 3650, 3725 Shooting star-style candle on market signals potential significant drops in S&P 500 Rotation in market performance in past month, with energy, utilities, financials, staples, healthcare performing well, and semiconductors, tech, consumer discretionary, clean energy, solar struggling Stagflation trend reflected in performance of assets like gold and GDX Valuation compression in clean energy sector VIX at levels similar to Global Financial Crisis, potential fear-driven market in 2023 U.S. two-year and 10-year yields have risen, potential for inflation due to Covid outbreaks and supply chain disruptions High yield market has weakened, rejection of topping islands and deviation from usual two Earnings in focus for market in Q1 2023 Sell-off in stocks raises concerns about future, 10-year Treasury yields at highest levels since November Factors such as high Covid rates and potential stagflation contributing to market rotations Potential for additional fiscal stimulus, potential for vaccine rollouts to impact market It is important to monitor key levels and consider protective measures for portfolios heading into 2023 If you want to continue, good luck, Chuck! The Blackest of Rocks In a recent article, BlackRock Vice Chairman Philipp Hildebrand explains that the Great Moderation, a four-decade period of stable activity and inflation, is over and that we are now in a new regime of greater macro and market volatility. This new regime is characterized by a recession that is foretold and central banks that are on course to overtighten policy in an effort to tame inflation, leading to persistent inflation and output volatility, rate hikes that damage economic activity, rising bond yields, and ongoing pressure on risk assets. Hildebrand and the BlackRock Investment Institute team suggest that a new investment playbook is needed to navigate this new regime, with three key themes: pricing the damage, rethinking bonds, and living with inflation. They recommend balancing views on risk appetite with estimates of how markets are pricing in economic damage, taking more granular views by focusing on sectors, regions, and sub-asset classes, and considering tactical and strategic investments in inflation-linked bonds. According to Mr. Hildebrand and the team at BlackRock, we have entered a new regime characterized by persistent inflation and output volatility, central banks pushing policy rates to levels that damage economic activity, and ongoing pressure on risk assets. This new regime is being driven by production constraints such as aging populations leading to worker shortages and the pandemic shift in consumer spending from services to goods causing shortages and bottlenecks. Central banks' policy rates are not equipped to resolve these production constraints and are left with a trade-off between crushing demand to achieve their inflation targets and allowing for more inflation. As a result, a recession is likely on the horizon, but as the economic damage becomes more apparent, central banks may stop their rate hikes even though inflation will not fully return to target levels. There are also long-term trends such as aging populations, persistent geopolitical tensions, and the transition to net-zero carbon emissions that are expected to continue to constrain production capacity and cement this new regime. In the report "Navigating Markets in 2023" published by BlackRock, it is noted that navigating markets in 2023 will require more frequent portfolio changes.In determining tactical portfolio outcomes, BlackRock plans to consider two assessments: their assessment of market risk sentiment and their view of the economic damage reflected in market pricing. BlackRock is currently at its most defensive stance, with options for turning more positive, especially on equities. The company is also underweight in nominal long-term government bonds in each scenario in the new regime, which is their strongest conviction in any scenario. BlackRock can turn positive in different ways, either through their assessment of market risk sentiment or their view on how much damage is reflected in market pricing. A recession is imminent as central banks attempt to control inflation. In contrast to past recessions, loose policy will not be used to support risk assets. As a result, the traditional strategy of "buying the dip" is not applicable in this context of increased macro volatility and trade-offs. Instead, it is necessary to continuously reassess the extent to which central bank actions are damaging the economy and factoring this damage into investment decisions. In the U.S., the impact can be seen in rate-sensitive sectors, such as the housing market, as well as declining CEO confidence, delayed capital spending plans, and a depletion of consumer savings. In Europe, the energy shock is exacerbated by tightening financial conditions. The ultimate economic damage will depend on the measures taken by central banks to reduce inflation. The author's approach to tactical investment is influenced by their assessment of market participant risk appetite and the extent to which damage is reflected in equity earnings expectations and valuations. They expect central banks to stop raising rates and for activity to stabilize in 2023, but do not believe that earnings expectations currently factor in even a mild recession. As a result, the author is currently underweight on developed market (DM) equities on a tactical horizon. However, they are prepared to become more positive as valuations better reflect economic damage and risk sentiment improves. The recent increase in yields has made fixed income assets more attractive to investors who have been seeking yield for a long period of time. Blackrock takes a specific approach to investing in this environment, rather than taking broad, aggregate exposures. They believe that the case for investment-grade credit has improved and are raising their overweight position both tactically and strategically. They believe that these assets can hold up in a recession due to the fortification of company balance sheets through debt refinancing at lower yields. Agency mortgage-backed securities, a new tactical overweight, can also serve a diversified income role. Short-term government debt is also attractive at current yields, and Blackrock has created a separate tactical view for this category. In contrast, Blackrock does not believe that long-term government bonds, which have traditionally protected portfolios during recessions, will serve this purpose in the current environment. They argue that the negative correlation between stock and bond returns has reversed, meaning that both can decline simultaneously. This is due to the likelihood that central banks will not implement rapid rate cuts during recessions that they have caused in an effort to bring down inflation to policy targets. Instead, policy rates may remain higher for longer than the market expects. Investors may also demand higher compensation, or term premium, to hold long-term government bonds due to high debt levels, increasing supply, and rising inflation. Central banks are decreasing their bond holdings and Japan may cease purchases, while governments are continuing to run deficits, leading to the private sector having to absorb more bonds. As a result, Blackrock remains underweight on long-term government bonds in both tactical and strategic portfolios. High inflation has caused cost-of-living crises, leading central banks to take action to bring down inflation. However, there has been little discussion about the impact on growth and employment. Blackrock believes that the narrative around the "politics of inflation" is on the verge of shifting as the negative effects become more apparent and the "politics of recession" take center stage. They also believe that central banks may be forced to stop tightening in order to prevent financial cracks from becoming more severe, as seen in the UK when investors reacted negatively to fiscal stimulus plans. Despite the impending recession, Blackrock expects that inflation will persist above policy targets in the coming years. They attribute this to normalization of spending patterns and a decrease in energy prices, as well as long-term constraints such as aging populations, geopolitical fragmentation, and the transition to a low-carbon world. Blackrock's strategic views have reflected this new regime, with an overweight to inflation-protected bonds for several years. However, market expectations and economist forecasts have only recently started to acknowledge the persistence of inflation. Blackrock believes that markets are underappreciating inflation and, as a result, have a high conviction, maximum overweight to inflation-linked bonds in strategic portfolios and maintain a tactical overweight regardless of how the new regime plays out. Blackrock says, the best way to predict the future is to examine what their companies are saying. They have a 2023 playbook that is ready to adapt quickly depending on how markets price economic damage and their risk stance evolves. Blackrock prefers short-term government bonds for income, due to the increase in yields and the reduced need to take on risk by seeking yield further out the curve. They are adding to their overweight position in investment grade credit, which they believe may be better positioned than equities to weather recessions due to higher yields and strong balance sheets. They also like U.S. agency mortgage-backed securities for their higher income and credit protection through government ownership of the issuers. Blackrock's expectation for persistent inflation relative to market pricing keeps them overweight in inflation-linked bonds. They remain underweight on long-term government bonds and overall underweight on equities, as they do not believe that the upcoming recession is fully reflected in corporate earnings expectations or valuations, and disagree with the assumption that central banks will eventually support markets with rate cuts. Instead, they plan to focus on sectoral opportunities resulting from structural transitions, such as healthcare amid aging populations, in order to add granularity while staying underweight overall. Among cyclicals, they prefer energy and financials, with energy sector earnings expected to ease from historically high levels while still holding up amid tight supply and higher interest rates benefiting bank profitability. They also like healthcare due to attractive valuations and likely cashflow resilience during downturns. “We expect views to change more frequently than in the past. Our stance heading into 2023 is broadly risk-off, with a preference for income over equities and long-term bonds. “ The Great Moderation, which allowed for relatively stable strategic portfolios, will not be effective in the current regime. Instead, they believe that portfolios will need to be more nimble. They do not expect a return to conditions that will support a joint bull market in stocks and bonds like the one that occurred in the prior decade. They argue that the asset mix is more important now and that getting the mix wrong could be four times as costly as it was during the Great Moderation. This is because the zero or even positive correlation between the returns of stocks and bonds means that it will take higher portfolio volatility to achieve similar levels of return. Blackrock sees private markets as a core holding for institutional investors, but is broadly underweight due to the potential for valuations to fall and the expectation of better opportunities in the future. They maintain a modest overweight on developed market (DM) equities, but believe that the overall return of stocks will be greater than fixed-income assets over the coming decade. Within fixed income, they prefer to take risk in credit, specifically public credit rather than private. They remain overweight on inflation-linked bonds and underweight on nominal DM government bonds, with a preference for short maturities to generate income and avoid interest rate risk. Blackrock says that the aging population is a significant factor in the current production constraints and will continue to be a problem in the future. As the population ages, the share of the U.S. population that is of retirement age and therefore not in the workforce is increasing. This is a major contributor to the decline in the labor force participation rate, which measures the share of the adult population that is in work or actively looking for work. The aging population is also negative for economic growth because it means that the available workforce will expand much more slowly in the coming years, leading to reduced production capacity and continued inflation pressure. Additionally, rising government spending on care for the elderly is expected to add to debt. Within equities, Blackrock views the healthcare sector as attractive due to its focus on developing medicine and equipment to meet the needs of an aging population. To conclude their playbook: “A bottom-up look at what our companies are telling us is probably the best lens we have into the future.” The 2023 playbook is ready to quickly adjust depending on how markets price economic damage and our risk stance evolves. They prefer short-term government bonds for income: The jump in yields reduces the need to take risk by seeking yield further out the curve. U.S. two-year Treasury yields have soared above 10-year yields. See the chart. They break out shortterm Treasuries as a neutral. They add to their overweight to investment grade credit. Higher yields and strong balance sheets suggest to them investment grade credit may be better placed than equities to weather recessions. They like U.S. agency mortgagebacked securities (MBS) for their higher income and because they offer some credit protection via the government ownership of their issuers. And their expectation for persistent inflation relative to market pricing keeps them overweight inflation-linked bonds. Long-term government bonds remain challenged as they have described, so they stay underweight. In equities, they believe recession isn’t fully reflected in corporate earnings expectations or valuations – and they disagree with market assumptions that central banks will eventually turn supportive with rate cuts. They look to lean into sectoral opportunities from structural transitions – such as healthcare amid aging populations – as a way to add granularity even as they stay overall underweight. Among cyclicals, they prefer energy and financials. They see energy sector earnings easing from historically elevated levels yet holding up amid tight energy supply. Higher interest rates bode well for bank profitability. They like healthcare given appealing valuations and likely cashflow resilience during downturns. A new strategic approach The Great Moderation allowed for relatively stable strategic portfolios. That won’t work in the new regime: They think they will need to be more nimble. They don’t see a return to conditions that will sustain a joint bull market in stocks and bonds of the kind they experienced in the prior decade. The asset mix has always been important, yet their analysis posits that getting the mix wrong could be as much as four times as costly as versus the Great Moderation. See the difference between the orange bar and yellow markers on the chart. Zero or even positive correlation between the returns of stocks and bonds means it will take higher portfolio volatility to achieve similar levels of return as before. They see private markets as a core holding for institutional investors. The asset class isn’t immune to macro volatility and they are broadly underweight as they think valuations could fall, suggesting better opportunities in coming years than Now. To read their full report with graphics see this link: www.blackrock.com Fear the VIX If you're a bear on the market, a VIX at 45 might have you doing a happy dance - but for bulls, it could be a different story. The S&P 500 index is a widely-recognized measure of the performance of 500 large publicly-traded companies in the United States. It is often used as a benchmark for the overall health of the U.S. stock market and has generated an average annual return of around 9% since its inception in 1957. The index reached an all-time high in early 2020 but experienced a steep decline due to the COVID-19 pandemic, although it has since recovered much of those losses and is currently trading near all-time highs. The CBOE Volatility Index, or VIX, is a measure of the expected volatility of the S&P 500 index over the next 30 days. It is calculated using option prices on the S&P 500 index and is commonly referred to as the "fear index." A high VIX suggests that investors expect the stock market to be more volatile in the near future, while a low VIX indicates that investors expect relatively stable market conditions. For a bearish investor, or someone who expects stock prices to fall, a high VIX may be viewed as an opportunity to profit from falling stock prices. This is because a high VIX can be a sign of increased uncertainty or fear in the market, which may be caused by negative factors such as economic recession, geopolitical tensions, or natural disasters. On the other hand, a high VIX may be seen as a warning sign for bullish investors, who may decide to reduce their exposure to the stock market or implement protective measures to mitigate the potential impact of market volatility. However, it's worth noting that the VIX is not a perfect indicator of market conditions and can be influenced by a range of factors beyond just the level of fear or uncertainty in the market. Additionally, a longer-term mindset bull, or someone with a long-term bullish outlook on the stock market, may actually welcome a spike in the VIX as it can sometimes signify a market bottom, or a point at which stock prices have reached a low point and are likely to start rising again. In this case, the high VIX may be viewed as an opportunity to buy into the market at a discounted price, with the expectation of generating returns over the long run. As such, it's important for investors to consider their individual investment goals and horizon when evaluating the significance of the VIX and other market indicators. On the Chart Al La Carte On the chart, we can see the daily movements of both the S&P 500 index (SPX) and the VIX. Historically, there has been a correlation between a spike in the VIX and a market bottom in the SPX. One of the most notable examples of this relationship was during the Global Financial Crisis (GFC) in 2020, when the VIX reached over 80. The reversal of the VIX marked the bottom of the market on March 16, 2020, a few days before the SPX hit its bottom on March 23. Since the GFC, we have seen similar, although smaller, spikes in the VIX and corresponding market bottoms. These include October 28, 2020, January 24, 2022, March 8, 2022, March 19, 2022, June 16, 2022, and October 12, 2022. It's important to watch for divergence between the VIX and the SPX to understand if a market bottom may be forming. See chart One strategy that some investors use is to watch for divergence between the VIX and the SPX. When the VIX is rising and the SPX is falling, it may be a sign that the market is approaching a bottom. Conversely, when the VIX is falling and the SPX is rising, it may indicate that the market has reached a bottom and is starting to recover. One example of divergence between the SPX and VIX occurred in late 2018, when the SPX was in a long-term uptrend and the VIX was trending downwards. This divergence may have indicated that the market was approaching a top and that investors should be cautious about taking on additional risk. Another example of divergence occurred in March 2020, during the COVID-19 pandemic. The SPX experienced a steep decline due to the economic impact of the pandemic, while the VIX spiked to over 80. This divergence may have indicated that the market was approaching a bottom and that it was a good time for investors to start looking for opportunities to buy into the market. One example of a technical analysis tool that can be used to understand the relationship between the SPX and the VIX is the "Vix_Fix" indicator. This indicator uses a number of inputs, including the lookback period for standard deviation, the Bollinger Band length, the Bollinger Band standard deviation, the lookback period for percentile, and the highest and lowest percentiles, to calculate the Williams Vix Fix (WVF). The WVF is a measure of the momentum of the SPX and is plotted on the chart as a histogram. The "Vix_Fix" indicator can be used to identify periods of divergence between the SPX and the VIX, as well as to identify potential points of market reversal. When the SPX is pushing lower and the VIX is pushing higher, it may be a sign that the market is approaching a bottom. Conversely, when the SPX is rising and the VIX is falling, it may indicate that the market has reached a bottom and is starting to recover. See chart In conclusion, it is important for investors to keep track of various economic indicators, such as the S&P 500 index, VIX, federal fund rate, and yield curve, in order to make informed investment decisions. While a bear market may be welcomed by some investors, it is important to consider the potential impact on the economy and individual investments. Understanding the historical trends and correlations between these indicators can help investors navigate bear markets and make the most of their investment strategy. It is also crucial to consider a range of factors and not rely on a single source of information when making investment decisions. Overall, staying informed and understanding the market can help investors make the most of their investments, even during a bear market. If you made it this far, congratulations, you are one dedicated reader and thank you for your time!
UShort
by OccamsPhazer
4
⇄ Sideways...30th December 2022🖼 Daily Technical Picture 📈 ➤ Equities bounced nicely. S&P500 recovered above the support level. European indices bounced off the 50-day moving average. ➤ Sideways would be the appropriate term to sum up the price action for 2/3 of the year. If we look backwards to May, the S&P500 has not made any progress up or down. Price has oscillated around current levels by +/- 10%. ➤ It feels like we are in a holding pattern. The longer this pattern lasts, the larger the resulting directional move. We have no influence on that direction nor the timing. Only the Market can decide on the when and where. ➤ The Bulls could argue that despite all the negativity, the equity price has held up well. The Bears would argue that only one shoe has dropped, the other shoe is about to. Either way, next year will be intriguing. ➤ I currently hold a +68% long exposure. The maximum portfolio exposure is +/- 200% on capital, the level of highest conviction. ➤ Conclusion: Intrigue is good, but making money is better. Let's do it together next year!
AMEX:SPYLong
by mrstockyetoro
Final Trade...29th December 2022🖼 Daily Technical Picture 📈 ➤ The last trading days of the year are upon us and the state of the equity market are very different to preceding years. It's time to waive goodbye and say good-riddance. Let's cheer for a sea change in the New Year. ➤ I made one last Trade to see out the year. Although the S&P500 broke below the support level it has not broken below the recent low of the last week. There's a good probability of a bounce here. ➤ The European indices are sitting just above their respective 50-day moving averages. They too may bounce. ➤ I currently hold a +68% long exposure. My US positions were cut today. The maximum portfolio exposure is +/- 200% on capital, the level of highest conviction. ➤ Conclusion: Back in the action.
AMEX:SPYLong
by mrstockyetoro
2
Fear curve inversionWe are all familiar when a bear market starts. The fear instantly hits us, the cold sweat. We've all been there... To study bear markets and crashes, we need to study human psychology. Curiously, it is very predictable. This is your mind, my mind, everyone's mind. Either you go through depression, either through financial disaster, it is the same. I tried analyzing psychology before in this idea down below, I really enjoyed it. As a trader, you might use two moving averages, for example one 50 day and one 200 day. To make sense of where you are, you need two measures. VIX is a measure of what we think future volatility will look like. So to make sense of it, you need something to compare it to. Answer? Current volatility. TradingView offers a neat little tool called "Historical Volatility". So we have a way to estimate current SPX volatility and compare it to what everyone thinks volatility will be like in the next 30 days (VIX). So I devised this chart, on top we see SPX. On bottom white we have a moving average of VIX index. On bottom orange we have the current volatility as measured by the indicator. Let's head to a period of a "bear market". A period when relative calm exists and noone expects a crash. During this period, we see that whenever there is a drop followed by a bear rally, the future expected volatility (VIX) decreases. Actual volatility (orange line) increases. It shows that everyone expects LESS volatility in the future ahead. Since a significant part of investors were convinced the bottom was in. The same we witness now. This is a vicious circle, something fundamental has to change in psychology to change the outcome. Either we find the button to fix all our problems, or we face the consequences that are fated to come upon us. Down below I add some screenshots showing the periods where orange was above white. This is a period when we are hopeful of the future ahead of us, after we pass some trouble that came. If you need more info, do read the linked idea called "VIX | The effect on SPX" PS. Just like yield curve inversions, there is room for error. A fear curve inversion means that you just have to stay alert. Tread lightly, for this is hallowed ground. -Father Grigori
SP:SPX
by akikostas
2
Low Low Low Low...28th December 2022🖼 Daily Technical Picture 📈 "Shawty had them apple bottom jeans (jeans) Boots with the fur (with the fur) The whole club was lookin' at her She hit the floor (she hit the floor) Next thing you know Shawty got low, low, low, low, low, low, low, low" ➤ That's the lyric from the song by Flo Rida. I had to look up the meaning of "Shawty". It is usually a reference to a young and attractive woman. Sexist or not this term nicely describes what's happening with the NASDAQ and the sexier (ahem...speculative) tech names. It looks like it wants to finish the year low low low low. ➤ The whole club (market) was indeed lookin' at her. All imagining the boundless future you could have together...except like many, we were late to the party and the music was about to stop. She's been dancing on the floor this whole time. Next thing you know, she literally did hit the floor in the most unflattering way along with all our dreams. ➤ OK, that's a bit over dramatic but you get the point. As usual, the masses piled on late to an overinflated market and that meant the party was about to end. ➤ With today's price action, once again we had a false dawn. Pre-market was firmly positive only to see it whither away by US market open. NASDAQ leading the indices lower. It's not pretty and getting tiresome. ➤ I currently hold 0% exposure. My US positions were cut today. The maximum portfolio exposure is +/- 200% on capital, the level of highest conviction. ➤ Conclusion: Back on the sidelines.
AMEX:SPY
by mrstockyetoro
Same Same, 27th December 2022🖼 Daily Technical Picture 📈 ➤ Thing's pretty much look the same as expectations prior to the Christmas Holidays. I'm expecting equity prices to bounce higher. The extent of which will tell us if the Bulls can regain a foothold or the Bears once again take control. ➤ Price again bounced off the Support level at 379/380 on the SPY. Pre- US Market Trade in Asia is firmly positive. Pre-hours have been wildly unpredictable of actual direction during US Trading hours. ➤ I currently hold +34% long exposure. My European positions were cut but I may re-enter depending on today's action. The maximum portfolio exposure is +/- 200% on capital, the level of highest conviction. ➤ Conclusion: Watch for the Bounce (if any).
AMEX:SPYLong
by mrstockyetoro
It's all AI. Watch the cycles, know the moves.Hey guys, so my mind is always chaotic, so don't mind all the drawings, but hopefully it will help you visualize what I see... The entire financial system, and I don't just mean the stock market, is all part of a giant super intelligent AI. Imagine all individual financial aspects of the economy, imagine it all on all a switch board with complex circuitry resembling a network of highways to each financial sector, and the computer knows how to shut off flow from one sector and switch the flow to another sector. This system can literally make money FLOW through a network of pipes that can shut the valve off and redirect flow of the currency. Not only can this computer do that, but while it's doing that, it knows how much to buy and sell, how long to hold, how long to let it go up, when to sell, initiates shorts, knows how much to let it drop before buying back in, how much to buy, how much to let it go up, when to sell, etc. It's literally repeating a mathematical algorithm similar to compound interest calculating. I don't care what anybody says....the market is manipulated...by an AI, There is no way that random people, at random times, buying at random prices, while simultaneously selling at random times at random prices, could produce the amount of perfect trends that we see in charts. Retail doesn't even budge the charts and is all an illusion. That's why 90% of traders lose. This the the place where everybody's money goes. If 90% are losing, and 10% is winning, that means that 10% are stealing the money of the 90% because they aren't as smart as the AI or have access to the switchboard, or have the money to flood into something. But just think about how dangerous and evil of a tool this capabality could be. The only way to win is through bluechip stocks purchased over and over and over, over the long term, regardless of up or down; or if you pull your money out when you have it. Point, blank, period. The only way you can win, is if you recognize the traps the AI has set in the past to be able to trap people's money, and know that the next time it rockets up, it's a trap to secure more money and for the old trapped people to leave at break even if they're lucky, because the pops become smaller and smaller and smaller. The entire market is a trap right now, but that doesn't mean that you can't take advantage if you're smart and can see what they do and see the cycles. My guess is with SPY, we're going to have a nice rocket up, for a good could days, long enough to make others think it's time to buy in, and it's going to slam down hard as hell. It's in the cycle.
AMEX:SPYShort
by rod_a_g1989
1
BTC/BVOL Bullish Continuation, VIX Bearish BAMM, DXY Bearish 5-0BTC looks to be continuing the move it started yesterday after hunting for the stops below the POC and then defending the EU Brinks Box During the US Brinks session. BVOL is Bullishly Diverging at the lows Signaling a rise in BTC Volatility is imminent. The SPX is Bouncing off of a Liquidity Zone and off of the 1.618 Extension PCZ of a Bullish Shark that may now take it back to the supply line and confirm a Partial-Decline for the second time. The VIX S&P Volatility Index seems to be struggling at the Moving Averages and setting up for a Deep Crab Bearish BAMM that will take it down to $14 The DXY is showing weakness at the PCZ of a potential Bearish 5-0 that will probably take it down to equal or lower lows than the previous low.
INDEX:BTCUSDLong
by RizeSenpai
Cheerless, 23rd December 2022🖼 Daily Technical Picture 📈 ➤ Equity prices made no further headway. Instead, a large Bearish day threatened to add to a Cheerless Christmas. Price managed to recover some losses by end of trading day leaving things in the lurch. ➤ NASDAQ is performing miserably. It's almost back to the lows of the year. One shouldn't be surprised it is lagging so badly. Used to being valued with a zero % interest/discount rate the exact opposite narrative of higher borrowing costs for longer is now firmly entrenched. ➤ I currently hold +68% long exposure. The maximum portfolio exposure is +/- 200% on capital, the level of highest conviction. ➤ Conclusion: Belated Christmas Rally anyone?
AMEX:SPYLong
by mrstockyetoro
1
Inspired, 22nd December 2022🖼 Daily Technical Picture 📈 ➤ If yesterday's bounce was uninspiring, the Bulls were clearly inspired today. It's almost Christmas Cheer time after all. The VIX has collapsed back to the pink highlighted zone in the chart. Let's see if the Bulls can break below. It's been bound by this zone since the start of the year! ➤ I'm not looking for a big aggressive bounce. Although that would be a nice surprise. There has been a change of momentum in the rally since the Oct bottom. 390/3900 resistance looms large. The European indices are acting relatively stronger bouncing off the 50-day moving average. ➤ I currently hold +68% long exposure. The maximum portfolio exposure is +/- 200% on capital, the level of highest conviction. ➤ Conclusion: Back in the action. Rally time?
AMEX:SPYLong
by mrstockyetoro
Using the VIX to buy S&P, NASDAQ and Dow Jones 📈📉🐂What is TVC:VIX ? The VIX is a real-time volatility index created by the Chicago Board Options Exchange (CBOE). This index was the first benchmark to quantify market expectations regarding volatility. However, the index is forward-looking, which means that it only shows the implied volatility of the S&P 500 (SPX) over the next 30 days. Since the VIX reaches its highest levels when the stock market is more unstable, the media communication tend to refer to the VIX as an indicator of fear and in the sense that the VIX is a measure of the market perception (particularly of concern) such a description is correct. The implied volatility normally increases when markets present turbulence or the economy decays. Conversely, if the prices of stocks are rising and not changes seem likely substantial, the VIX tends to fall or stay stable at the bottom of your scale. In other words, there is a negative correlation between the VIX and the stock performance. For example, in November 2008, a As stock prices rise dipped, the VIX hit a high historical of 80.86. in the winter of 2013, when the value of the shares rose, the VIX held at about 12 points. WHAT DOES THE VIX MEASURE? The VIX measures the expectations of volatility of the capital market based on the option prices. Instead of measuring volatility “realized” or historical, the VIX projects volatility “implied” or expected—specifically from the 30s future days—by measuring changes in S&P 500 option prices. Historically, when the VIX reaches 40 points or more, the S&P is at the end of its downward trend to make a range or rise, when the VIX reaches 40 points is when it could be said that we are already in recession and "when there is blood, it is because the sharks already attacked" possibly in 2023 we are facing a recession but it could end in a few months and in 2024 have a rise in the American indices as can be seen above. REMEMBER "HISTORY DOESN'T REPEAT BUT IT RHYMES" TVC:SPX TVC:NDQ TVC:DJI Possibly the recession ends in the first half of 2023 when the FED lowers interest points to 0.25%
SP:SPXLong
by Ed_Ale