1️⃣ The reciprocal relationship between risk tolerance on the one hand and a contested election on the other.
As we will soon notice, my dear followers, my conception of the next few weeks and months is largely based on the knowledge which we have painstakingly collected since 2019.
2️⃣A house of cards.
I started picking up on the alarm bells in October last year.
My VIX models were starting to warn of a +500% move towards 85.
A sweep of the lows under 12 to capitulate any soft bulls would force put covering.
This was all done in Q419 before a contraction in globalisation entered into play from Q120.
You can check for yourself here the timestamps
…and oh surprise surprise…
85 was the exact HIGH of the FIRST COVID CHAPTER.
🔑 Pay attention to what happens next
Sure the move from 12 to 85 might have been easy to spot
- We tested it to the pipette ✅
- Buyers were exhausted and found a valid place to cover ✅
I want to highlight something very important, as you have all seen the flows live in advance....Let’s go into some details and leave make the picture crystal clear:
If you are wondering how...?
First if we look vix from 85 as we originally did, we can see the October 2019 highs are open.
Obviously, these are same levels when my models began to pick up the alarm bells.
Here is where things start making sense
Been in absolutely no doubt.
The biggest sharks in the game are repositioning.
Remember, VIX ⬆️ gives us the green light to sell risk in absolute terms.
As you can all see we continued to track the flows together across other asset classes.
In this case, the move was not without venom for European Equities.
Using the 2020 map for DAX for reference:
Perpetual bonds are the Trojan horse for government defaults. Insiders know what was cooking and wanted to unwind German Equity exposure outguessing the ‘Green New Deal’.
Well we are back to square one.
Equities completing the retrace and we are set for Covid Chapter Two.
Professional portfolios are going to come under severe stress in the coming weeks, even the most advanced players will be tested to their limits as they all have the same ingredients.
Keep the great info. coming, it really helps this old guy.