A cyclical Stock. Similiar to a sinus curve. A recession ist coming, I am short. This is no financial advice.
-The current zigzag trend in the VIX ist highly unusual. -In my opinion it reflects the struggle of markets betwenn asset inflation and interest rate hikes. -Historically, a VIX over about 30 led to exponential increase of volatility at some point (Margin Calls, Panic,...). -Also the DXY ist at an historically interesting treshold, which increase concerns about...
In the 70s and 80s Inflation and interest rate hikes we're important, as it is the case nowadays. The chart shows Interactions between combinations of inflation and the interest rate and the SPX. Study carefully. No financial advice.
If the USD rose substantially above 103 Fürther volatility followed. There might bei opportunities for Trades ahead.
The USA have been spending too much since the 80s. Too much debt, too much money stock in comparison to GDP. Inflation will persist or strong interest rate hikes will severely hurt. US equity too expensive. Risk on. No financial advice.
The SPX' s rise since Corona was fueled by increase in money stock (orange). IF the FED raised interest rates in a decisive way, this could imply a serious downside for the SPX.
This VIX pattern could be/become self-reinforcing (via psychology, margin calls, stop loss orders...). In particular, if the VIX rises above 30 (link to more global analysis below).
Chart 1: Whenever the the Russell 2000 came down and got close (from above) to the SPX, the SPX went further down. (Pleased ignore the first red dot to the left, as the Russell die not come down there to meet the SPX but vice versa) Chart 2: Whenever the VIX, coming from a modest down, crossed the red line, soon further spikes in volatility followed (red...
The Chart shows that the SPX hast been growing faster than the GDP, and in comparison, the SPGSCI underperformed (all in % of SPXs growth). My thesis ist, that the SPGSCI will outperform the SPX in this decade. Background: The SPX should not grow way faster than the GDP. Demand for commodities ist raising.
Since the 80s, the US made lots of debt (for importing goods and for defense). This debt was financed via an increase in USD money stock. An increase in money stock equals an increase in demand. This fueled Gold prices (or rather, the USD lost buying power compared to Gold) and finally Inflation. As there ist so much debt by now, interest rates cannot bei raised...