Time to Jump?VIX pushed down long time and extreme lowes showing for a while. To go more lower values it needs to go up first.
VIX trade ideas
SPX Vol near multi-year lows...US economy is a shibboleth; its data is faker than Hunter Biden's teeth.
Geopolitical trends are showing US 'diplomacy' is basically a Clown Car with a demented octagenarian in the driver's seat; US Death Merchants are seeing their products humiliated on the battlefield; the Fed is preparing to pivot back to irresponsibility; the Global South is de-dollarising; BRICS+ will be twice as influential in energy markets as OPEC was in the 1970s... and yet SPX volatility is in generational low ranges .
Sure, it could get down to a 9-handle; it's done that before - and I tagged that as well - called a VIX BUY "if it dips under 10".
I'm going to put every dollar I have into LONG VIX. No stop; use as much leverage as possible; feed any margin call. If it stings for a bit, it means we're in a 2008 situation, so the payoff will be extraordinary.
VIX is back to the pre-2020 market crash levelsIn early June 2023, we noted that VIX reached levels that preceded the 2022 market meltdown. After that, the index continued lower and advanced toward levels unseen since January 2020 (levels that preceded the 2020 market crash). The current low value of VIX reflects extremely high complacency in the market and the growing dismissal of any economic downturn on the horizon. With many people already thinking that recession is averted and the market is poised to continue only up, we wonder whether the time for contrarian play is slowly approaching us. As a result, we will monitor the market very closely and look for signs that will prompt us to action. We will update our thoughts on the subject with the emergence of new significant developments.
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.
What is the $VIX showing us?Good Morning
SMALL THREAD
While we did call the NASDAQ:NDX weakness & top, at that time we didn't think it would be as bad as it got, at least I didn't.
Last year we really thought TVC:VIX would break out & the markets would collapse. Our original expectations didn't pan out but we, mostly I, changed as more data came in.
We called a bunch of bounces & tops, ALL DOCUMENTED, BUT our best call was becoming BULLISH in late September on DJ:DJI & Bullish on NASDAQ:NDX in October.
Since then we've been cautious Bull with a few bearish calls but ultimately, we were/are still bullish.
During this time the TVC:VIX was forming a HUGE Symmetrical Triangle that we posted on countless times.
We were biased and thought the TVC:VIX would break out and #stocks would be cremated. Obviously, were bullish after Sept 2022 but we thought there would be an eventual harsh crash that made 2022 like a walk in the park.
When #VIX broke down we were SHOCKED! That's when we knew that the can was being kicked further down the road. There's a lot more at play that we've been discussing on occasion.
SP:SPX has been on a tear but it is currently in a consolidation phase as seen on a daily chart. However, as you can see, RSI can remain overbought on a weekly for long periods of time.
TVC:VIX is slowly closing in on a major support level. While it can break through, IMO, don't think it will do it the 1st time.
#VIX will likely get a nice bounce. This bounce will likely be strong and could mean possible weakness for #stocks, soon.
VIX/VVIX Divergence before large drawdownsJust happened to be playing with a few things on tradingview today, thinking of new ways to identify trade opportunities. I often have to keep reminding myself to zoom out to see the bigger picture. This is one of those instances where I might have stumbled upon something useful for very long term trade trends.
As many know, VIX is an extremely useful indicator of market sentiment, it also signifies part of what makes up extrinsic value of options contracts. On the longer term time frame, you can see in a bull market volatility slowly compressing lower and lower. Lower highs, lower lows. Eventually, that trend starts to reverse as more and more large players maybe begin to take profits and go short, and more options hedging happen towards the downside.
VVIX is a further still derivative of that. It's the measure of volatility of volatility. What I did today was take VIX and divide it by VVIX and see what pattern emerged. At a glance, it's not far off VIX by itself, but, I did notice that weeks or even a couple months before a large market downmove, it gives a little more advance warning that a big sell off was imminent. A solid warning is the lowest low followed by two higher lows, as seen here:
If I instead plot VIX by itself, you see a double, maybe triple bottom at near enough the same low before you get a higher low. In the case of the second half of 2018, there actually wasn't an advanced warning at all:
But, what VIX by itself does show, that VIX/VVIX did not, is a lower high when the market found bottom in October/November 2022. VIX showed a lower high, VIX/VVIX shows the highest high at that point. So, always worth glancing at both on a long term chart if you're looking for very long term bets on the market and trying what normally is considered a fool's errand to call the tops and bottoms of every bear and bull cycle.
It might still be a fool's errand, but maybe this helps some of us get a little closer to being able to pull that off.
With that being said, we have just set a new low in both VIX and VIX/VVIX for the year, even though we just had a down week (6/20-23/2023), I'm not convinced we stay down for long until maybe I see such a pattern appear again with higher lows appearing in VIX/VVIX.
Observing VIXNow a lot of people are posting long ideas that it will blow up.
I am framing this idea as neutral.
Since we have a contradiction.
Consider.
1. The Heikin Ashi weekly candle is consolidating by breaking through a bullish wedge. Yes, it is definitely a very reversal pattern.
2. Two small Kumo clouds (both red and green) are floating over candles. Their size tells us that we don't have much resistance at this level. The Tenkan and Kijun lines are below the clouds, but that's not that important in this situation. What is more important is that the indicator is drawing us a declining red Kumo cloud and we can't tell if it will progress down further. Sometimes these "little red cloud, little green cloud, expanding bigger red cloud" constructions are a very implicit threat. We don't know how much its lower boundary will drop before it marks its end...And note again, this is a weekly chart, not some 4 hour chart...We'll have to watch all spring to see what happens.
3. Next. SQZMOM shows descending red bars and two gray crosses, which we have not seen for a long time. This does not augur well for the upside. In fact, on the weekly Heikin Ashi grey crosses were 3 years ago... Only with green bars and they worked out in full... SQZMOM tells us about weak growth prospects of the VIX.
4. However, we see a hidden bullish divergence on Stochastic RSI. This comes into contradiction with point 3.
5. I also looked at the latitude indication which indicates that the highs have started to dominate the lows. This is a bullish sign. But it is also inconsistent with points 2 and 3.
We'll just have to watch to see.
32.4 level is extremely important.
SPX Short: At resistance and VIX is upBased on trendline projected from the last 2 peaks, it seems like S&P has reached another resistance. The VIX is strangely up. This means that there are more puts being opened 23-30 days out and thus causing VIX to go up. Protection is being bought. No matter, it is important to realise that the risk-reward is now favoring the short side.
