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ridethepig | Surfing the Vix⚠️ Chapter IV: Vix and microstructure ⚠️ For those following the swings in Vix since 2019 you will know we are tracking for the overprotection from sellers and how to try to get rid of the 'all is back to normal' sentiment. This is a shorter update than the previous three chapters, intentionally aimed at casting some light on how sellers are overshooting support and how risk 'may' appear in the microstructure. So let us start by recapping the swings between the starting point of the expansion which set this all in motion: Capitulation waters clearly represents a manoeuvre which is closely intertwined with microstructure and liquidity game theory and indeed must always be so because of the nature of free markets. Nevertheless, there are traces of overshoots to the downside . For example when sellers went overboard to sweep the lows underneath 12 in attempt of opening the single digit block: Buyers loaded and created a strong basing formation as pointed out in chapter II. In the area where sellers overshot is a strategy you will notice me using often. Play through the charts and notice how minimal drawdown was required at the base ( for which we gave incredible respect ) and because we had to keep in mind the unavoidable possibility of economic cycle inversions. Here is the final example in the recap after we exploded towards the 85 final target as called from 12 (+500% and a historic move in volatility). "VIX Completing the Swing to 85" Intending to meet a possible barrier at 38 and 25, only now does it become clear as to why price stalled at the highs instead of developing a three figure vix print. No matter what happens, this has and will remain three superb chapters of effortless unravelling of the soft retail and unaware institutional money . The spare room to 100 remains open. I think the 'everything is back to normal' crowd are too hasty in this and do not realise the tsunami of bankruptcies and debt on the horizon as we enter into year-end and 2021. Every digit retrace point in the VIX from current levels should be bought aggressively for a position way out to the 85 highs and 100 extensions for an epic news headline. This move should by now be chalked on all charts . As usual thanks all for keeping the feedback coming 👍 or 👎
CBOE:VIXLong
by ridethepig
23
VIX/VIX3M Ratio Chart A favorite ratio of mine has reached the low end of its range. The sentiment ratio which illustrates complacency and suggests a contrarian stance is warranted. Like all contrarian metrics, betting on mean reversion typically comes to fruition eventually, but tells you nothing about when that will occur. That being said, I try to be as 'timely' as possible though when I make alternative posts. What's Going On? The market is taking a leap of faith by investors who have a trust in policymakers to maintain the flow of stimulus, and for things to return to some form of normalcy. Investors are taking a leap of faith from here, clearing the chasm of economic realities. Fiscal life-support measures, Stimulus measures, and investor faith that's stopping the whole thing from unravelling. What Should I Do? Be mindful of these charts, and monitor the progression of them.. because if there's any sign that the narratives supporting investor faith start to dissipate or disappear, or that faith gets shaken, then we could get a bit of an unravelling here. In the mean time, Central Banks have our back. Best, RH
CBOE:VIXShort
by RHTrading
1
VIX compressionThe vix has a history of forming explosive price wedges. It wouldn't be a stretch of the imagination to say we're forming a new wedge here. Also, I suspect that we're on the verge of a new upward wave in volatility from here- it might just be a lower high in a new wedge. The market has gotten way ahead of itself and there are just too many new traders piling into popular stocks. They are fish in a barrel and the cork is about to get pulled. The sentiment is absurd and we now have some of the lowest put:call ratio's I've seen in my years of trading (shorts squeezed out). I'm hoping for the market to retrace 50% of the last fed rally but I would be thrilled to see lower lows by Nov-Dec. Take a look at the other chart below on VIX weekly timeframe and notice the very clear cycle lows/highs with the sine wave on stoch/rsi indicator.. We're very close!
TVC:VIX
by gghsusa
12
ridethepig | VIX Slingshot In Play 📌 Working in public has given us a live example of Volatility expanding in times of a crisis. Here it is usually a swing recap for those following. As you will remember we made good use of the initial tempo in the retreat : The show must go on... in came buyers with the counter attack and no surprises on the timing, covid was simply the trigger. To save the overshoots, we cleared all and even covered some at the 85 highs. 📌 When a deep retrace came into play it has created enough energy for a slingshot. Buyers of volatility are quite happy to exchange here at the lows as they are in full control and holding the bid at 🔑 support. Sellers of vol and the 'everything is back to normal crowds' will be condemned to liquidation. This wave 2 attempt at breaching support which has miserably failed today is a visual example of pinning your opponent. The key point is liquidations. Global Equities are complacent, retail have bought as much as they can. Large hands have cleared, since the Covid chapter II irritates them (from a retracement perspective at the very least). And it will comedown to a massacre in VIX... Seriously it is just as well we are seeing the back of VVIX...that really was a monster. 📌 How and Why these slingshots occur in VIX? When major forces on both sides clash together, it comes down to an exchange. In this case the health crisis cannot be solved via the monetary or fiscal side, shutting down the economy has caused long term repercussions. Especially with the elderly and overshoots on dependencies. In simply terms the older demographics will be forced into using savings to support families, businesses will be more defensive with capital, the issue is not solved with stimulus, it is solved with CONFIDENCE . The policy mistakes here are off the charts and may even cost Trump the election. As usual thanks for keeping the feedback coming 👍 or 👎
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TVC:VIXLong
by ridethepig
18
ridethepig | VIX Positional PlayLet me begin by congratulating all shorts from the 85 highs , perfect timing in another flawless VIX swing traded live together...btw that is now sharing its significant anniversary moves with a historic crash in Global Equities. Mission accomplished! Sellers of Vol can now really consider themselves as an integral player caught in decent profit taking areas which also happen to be the middle of a WIDE range and to put the cherry on top, buyers of Volatility are still under further protection from the virus impact.... it's time to pay attention. As you look at it be sure to notice how the inner strength which belonging to those who bought the initial breakout, failed immediately on the 85 target as expected. We could go on to consider many points which are worth considering, but for the sake of today's example we are going to look at the bullish cash here. Before we turn to the next strategy, we must sum things up: Volatility Cycles you see, project a point in defensive or attacking behaviour as they expect strategic advances of capital flows. It always comes down to the same situation: any swing complex which could be called sound, must always take in the brutal component of Volatility. It is the centrepiece for measuring confidence...and the return to 'normal' life after covid-19 (whatever that means) is all down to confidence. How fast the consumer comes back and managing these expectations is the one to track and it boils down to whether people have the confidence to return to hotels, travel, shops, bars, restaurants etc. The great charter we have traded together so far has played a vital part in predicting decisions and the economic cycle down. Now it is no surprise...It was an essential ingredient for the insane moves I forecast right on time in Unemployment claims. Economists are the unsung heroes of the financial world and their role as academics will only be recognised by politicians by the time it is too late. Selecting important movers and shakers, preparing flows and insuring facts and history align and summarising the strategy precisely all require expertise, intelligence, care and effort. The moment one starts the think about it, one realises how great an impact economic strategy must have on the development of finance. The VIX is in a position of being able to bring together its own herd of early sellers - those betting on the virus to be a one and done quick bounce, then everything is neatly protected again and the shepherd can turn to other matters with a clear mind. No...the stupid sheep will run away from the shepherd - watch-out for the flock, smells to me like the virus ending has one final manoeuvre and a sweep of 100 for a blockbuster headline would be an easily won ending. Remember, the necessity for sellers to clear shorts from the 85 highs is both strategic and planned! We are entering into key value support. This case for a fresh high in VIX would coincide with a fresh low in Global Equities, another round of demand for USD on the G10 FX board (see related ideas below)....it opens many doors, correct handling of the strategy indicates an extremely difficult few weeks ahead and requires exact knowledge of how to play the advance. So I must leave you, dear reader to your own devices, and hope that fate is kind to you. As usual thanks for keeping the support coming with likes, comments, charts and etc!
TVC:VIXLong
by ridethepig
13
ridethepig | VIX Completing the Swing to 85!!A Vix swing, which did not require "majority" or "consensus", rolled forward under the noses of retail and even some of the larger macro hands. It advanced incredibly far reaching a high of 84.8 ... Don't be a dick for a tick !!! Finally there is an opportunity to clear all targets in the breakthrough. As an example of this, let us turn to the well-know chart VIX - Capitulation Waters. There followed the initial 38 target and 85 extension. The attack was carried out with sufficient substance via Covid-19, if the panic subsides or is reaching a "peak" then Vol must fight for places to make a stand. So the natural indications are 38 and 25 (now that sellers can advance once more). Until this excellent swing was played, the closing of the highs was more of an ideal than reality... Coronavirus turned this ideal into the said reality. This corresponds to the process I have remarked on, that the notional restraint of price gives way to an information block. So much for the strategic and theoretical manoeuvre, the practicality of VIX at these levels creates two new inevitabilities: (1) ... Recession (2) ... Consumer Confidence reaching decade highs Here I would like to point out that, selling VIX remains the correct strategic plan; you can see why in the note in Gold's move. Buyers forsakes the main plan - and tries once more to get in the 1700 highs; but only manages to do so because sellers failed to spot a subtle resource . Naturally in VIX it is pragmatic to aim for 38 and 25 driving Vol buyers all the way back, but one must not go so far as to subordinate the strategically necessary plan to the idea of recessionary effect. As a whole, the classical weakness for art! Thanks as usual for keeping the likes, comments, charts and etc coming! I hope it has helped, finally time to unwind a flawless +500% swing to the topside from Q419. Well done all those that caught the move!
CBOE:VIXShort
by ridethepig
23
VIXM long when RSI approaching 50In my prior VIX ideas, I analyzed VIX value trends. I noted that the mid-term VIX etfs/etns (VIXM and VXZ) tended to trend downwards over time and also lagged behind VIX value movements. After then analyzing VIXM, I noted these observations can be seen quantitatively in the RSI. Note that the VIXM is usually declining with a negative RSI. Successful VIXM long trades appear to occur as the RSI trends up and crosses 50. Volumes are usually high as well. While I opened long positions in VIXM and UVXY, that was premature and these will not do well short term. Certainly a cost averaging approach can work but VIXM reacts slowly. I will not buy more VIXM until the RSI is trending up towards 50 with increasing volumes. Since these low VIX episodes occur during strong bull markets, drops in the S&P 500 (and rising VIX) are leading indicators for going long in VIXM.
CBOE:VIXMLong
by haug01
VXX should open upThe VIX futures had a strong move up after the market closed. the VIX rtfs/etns should open higher. The high volumes also correlate with improving RSI. It is not clear whether the SPX500 will keep falling with increasing volatility going forward. tntsunrise shows a possible rise in the SPX500 to a shorting zone, then a further fall. VXX may be traded in the short zone if that happens. A starting VXX position may be taken here with a stop loss. Check the VIXM chart for a daily RSI approaching 50 in an uptrend per my prior post. Big rises in VIXM requires several days of SPX500 crashing. Note the VIX rtfs/etns usually decline except when the SPX500 is crashing/falling. They are not truly coupled to the VIX but are like fiat currencies.
CBOE:VXXLong
by haug01
VIX Bull Market BehaviorThe VIX is now at a 52 week low. This may be a one day event or a several week event. The following data are meant to help guide the decision as to when to buy/go long on the short term and midterm VIX related etfs/etfs. The VIX daily minimum and closing prices were downloaded from the CBOE website. The % of days with daily minimums and daily closing prices were then analyzed from May 23, 2014 to August 5, 2016. The time from May 23, 2014 to July 24, 2014 (43 trading days) was identified as a bull market run withe the VIX closing < 11.5 on May 23, 2014. May 23, 2014 VIX closes at 11.36 July 24, 2014 (S&P 500 Daily Cycle Top) at 1988. July 24, 2014 VIX closes at 11.84 From May 23, 2014 to July 24, 2014 (43 trading days): The VIX close was < 10.0 zero days (0 %). The VIX close was < 10.5 one day (2.3 %). The VIX close was < 11.0 nine days (20.9 %). The VIX close was < 11.5 fifteen days (34.9 %). The VIX close was < 12.0 thirty one days (72.1 %). The minimum VIX close was . The VIX low was < 10.0 zero days (0 %). The VIX low was < 10.5 three days (7.0 %). The VIX low was < 11.0 thirteen days (30.2 %). The VIX low was < 11.5 thirty one days (72.1 %). The VIX low was < 12.0 thirty seven days (86.0 %). The lowest VIX was .10.26. The VIX closed below 11.5 until August 22, 2016 After that, the VIX did not close below 11.5 until August 5, 2016 For traders interested in going long on the VIX rtfs and tens, positions may be opened when when the VIX is < 11.5 and especially when VIX is < 11.0 and < 10.5. For the midterm VIXM and VXY, a cost averaging strategy could be considered. I added to my VIXM position on 8/4/2014 and added UVXY calls on 8/4/2016.
TVC:VIXLong
by haug01