VIX trade ideas
VIX 2 moon.I think we may now, finally, be in the cusp of the real volatility breakout.
Something that will later be referred to as a Black Swan in the indices and the VIX making its big move.
Look out for the headline, there'll probably be one.
$VIX to 33?Falling wedge forming to retest previous resistance. Expecting the zone to swap from resistance to support. Added confluence for this price action would be the trend line starting from August of this year expecting it to hold BUT if it breaks will be looking for it to continue to the downside aka a new trend.
VIX is in C&H patternThis is getting so close for a breakout and big market sell!
There is also smaller C&H if it hits 31 level.
Regardless of a scenario, we are very close to some real move.
I was expecting this move and wanted to see a year low hit end of Oct into early Nov.
It seems its going to play out well.
Question is only one - how low?
Is $VIX about to break out to 50? (bottom coming?)After being in a "range" of sorts for the past year or so, is the VIX about to break out to 50 and above?
If this proves to be correct, due to some unforeseen event, then arguably one can say that a bottom is near.
However, if we grind in this range, making lower lows and lower highs, then we can grind down to lower levels for... well, for quite a while, imo.
VIX could have a turning point soonVix is bouncing in what looks to be a bullish pennant.
I think VIX is going to test the previous high at 34.85-35ish In theory this should create a double top.
Pennants can easily be bullish or bearish though depending on market sentiment and momentum really so there is a chance it breaks to the down side.
If the pennant turns out to be bearish there's a possibility it follows a harmonic pattern and then breaks out and goes back to around 37
VIX suggests stock market capitulation is yet to happen- stocks have been in a decline for almost a year now (see past analyses where this has correctly been predicted)
- despite that VIX, a measure of stock market´s historical volatility, has barely moved
- this is in stark contrast to Q1 2020 when it experienced a massive surge
- with volatility on VIX very low that implies a sharp move of (likely) similar magnitude is yet to happen
- an upside move in VIX should result in increased stock volatility
- increased volatility in stocks more often than not results in downside price expansion
Not a time to be a hero. Protect your capital at all costs.
VIX Testing Key Resistance AgainVIX is testing the key resistance yet again. The weekly stochastic near 80 is very high and usually signals a rally in stocks is not far away at least in the short term. The VIX call buyers are nowhere to be seen so this also confirms that the VIX is over extended. See if we get yet another rejection off the key level. Retail stock traders have rarely been so bearish, this is almost certainly pointing to a short covering rally in coming days.
Edge of a Precipice Will we ever see VIX at 16 again?
Here I explain the mean reverting nature of VIX.
Then I predicted exactly were VIX and JHEQX would be on Friday, October 7th.
Now we're sitting at the edge of a precipice of the worst financial disaster in history.
So I wrote an indicator to give us retail traders an inside eye so maybe we could catch a long vol opportunity of a lifetime.
If you understand how a large institution positions assets and how they hedge against a market correction you can a) find these hedges and b) use dealer positioning to predict it.
That brings us back to VIX.
Vix is calculated using SPX Weekly options rather than stocks.
If Vix sustains higher levels for longer it is telling us liquidity is bad.
As more institutional players position to the downside eventually there will be too much money on the same side of the boat and the boat will flip.
Think of market participants as people on a boat and the waves are volatility.
As the seas get more violent (swings up and down in market price) people on the boat are going to try to find a position best suited for the volatility.
Ask yourself now, is buying puts a good way to hedge downside?
No.
Fixed strike implied volatility is a disaster.
It has been collapsing for nearly the entire year.
Institutions protecting assets (like British pension fund managers apparently) with puts are getting worse and worse returns hedging with puts.
You may be able to pick off edge as an active trader by buying well timed Puts and cashing in on premium kick for a quick 100% return, but these fund managers holding puts are getting destroyed.
Instead, institutions are piling into selling puts while shorting stocks.
We all know what happens when too many shorts pile in, they frequently get squeezed.
I was expecting short squeezes to take hold when Oil started climbing.
Because the alternative is JHEQX leaning negative into an already crowded short side and a VIX > 32.
And that is exactly what nearly happened on Friday.
If futures drop overnight or price drops below 3580 JHEQX will start selling and the only thing stopping a drop to 3200 will be the FED with its left tail tucked between their legs with some fresh QE.
As a great philosopher once said.
"Dread it. Run from it. Destiny arrives all the same. And now it's here"
VIX - Stocks Sentiment in preparation... for the ultimate drop. So we have broken the top curve - that is bad as hell already in itself. Additionally we retested it and have been trapped since then between the top descending trendline and the curve.
What I expect to happen next is for VIX to consolidate ( or break to the upside and retest the trendline ) until EOY. Check my US100 idea to see what stocks predict in the meantime.
As a reminder - VIX has never shown such sentiment "moves" as we have nowadays - but just once in the past - And that one time has been replayed perfectly so far - that's one of the reasons why I expect VIX to consolidate or even show slight signs of minor-relief for stocks until Christmas season.
Cheers!
vix shortvix setup.. short..
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vol o' til it teeascending wedge for almost 12 months now. will brake two the upside son. market makers just stalling indexes to mess with retail folk, including me.
upper BB on weekly capping action, upper BB on monthly curling up. only a matter of time before it ramps and touches highs from 2008,2020.
Volo til it teeVIX forming an ascending triangle over the last year. Eventually this thing will break. Maybe to the downside but it's hard to believe. IMF going to downgrade global growth projection for 4th time next week and CPI gets released as well. Gas kept rising and is $7 gallon in CA even though oil was getting hit before OPEC decided to do some cuts. Hard to believe inflation is rolling over. Market makers doing there job and making thing go sideways from now.
VIX looking longIt seems like VIX may run up either tomorrow or sometime over the course of next week.
VIX is trading in a falling wedge inside of a rising channel
Theres a few other indicators I've highlighted in the chart to possibly back it up.
Possible upside run to 35.00
The other possibility is that we're nearing the end of the rising channels lifespan and we see some VIX relief if it can manage to break 28.00 Friday.
VIX - A strong warning to inexperienced investors! In September 2022, we warned investors about the volatility creeping back into the market and set price targets of 30 USD and 35 USD. Subsequently, in the following days after our warning, VIX skyrocketed, hit our price target of 30 USD, and halted its rise at 34.88 USD.
Despite the index halting its climb merely 0.12 USD below our price target, we remain very bullish. Indeed, we still expect our short-term price target of 35 USD to be reached within days or weeks.
However, we believe that VIX will not stop there but will continue higher, increasing the odds of a market crash. In our opinion, once VIX breaks above the range shown in the title picture, the market volatility conditions will start to resemble the market crash in 2020.
That would align with what we outlined about the general stock market progressing into the second stage of the bear market, which will be confirmed by declining corporate earnings over time. As a result, we expect trading conditions to become substantially more challenging; therefore, we voice a word of caution to inexperienced and lay traders.
Illustration 1.01
Illustration 1.01 displays the daily chart of VIX and two trendlines highlighting the uptrend.
Illustration 1.02
Illustration 1.02 shows the daily chart of the Nasdaq continuous futures, which have declined more than 30%. Additionally, the graph shows other major U.S. indices, all in the bear market territory.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
