VIX at the daily view.
No, this doesn't mean I am back. I am currently waiting for this overseas conference call to begin.
Spot VIX visited and bounced from the 200 week SMA as predicted last month. That's where I theorized the beginning of a possible VIX spike. With closing prices, VIX created lower lows, but the RSI created higher lows. That's the early warning that a VIX spike is beginning to form. It happened in late May and late August 2020.
This doesn't confirm a VIX spike quite yet. This is merely step 2 in the VIX dance. Step 1 was keeping VIX alive with bunny hops... as stated many times before. The next step is a clear ramp-up pattern in the VIX. That doesn't happen immediately. It normally takes a couple of weeks for that pattern to form.
When precisely will the spike happen? Who knows? I'm not going to be married to a stringent prediction. That's the thing about trading. You have to react to patterns and not have a stringent prediction (permabull/permabear). The market gives you data everyday. It's up to you to interpret it rationally and coldly.
How big will this VIX spike be? Smaller than what we are accustomed to. Why is that? This is not 2020 anymore. The conditions nowadays are closer to mid-2010s than 2020. Market breadth is soaring. Sectors are rotating. Can you honestly say that we are worse off today than where we were at the height of the lockdown? Short answer is no. My recent promotion is usually a sign saying business is picking back up again.
I've read some ridiculous calls from Twitter bears that the VIX will go above 50. Why is it ridiculous? ES would have to break 3600 in less than a week or ES just keeps selling off until the 3200s. There are 6 historical trend lines (major supports) and multiple moving averages before 3200. Remember, this isn't 2020 anymore. Let's look at history. The VIX only went above 50 two times in the last 13 years. The VIX went above 40 eight times in the last 13 years. There are about 250 trading days per year. You can do the math in probability.
A very big red flag that the permabear has no clue how the VIX works is if they think it's purely an inverse index. Volatility is the degree of variation in price that is measured by the standard deviation of returns over time... which means the expected move can be up or down. Another red flag is when that permabear thinks a green day in VIX and ES automatically means a warning sign. Again, look at the variation in price compared to previous days.
If I am wrong, which deep down I hope I am, then the market will give you a very big buying opportunity.
And yes, I do call out large permabears and permabulls for giving terrible, account destroying advice. Why? There are many traders who have children and their children might get dragged into their parent's mistakes. In a base philosophy, no child should inherit the mistakes of their parents. It's the parents' job to make sure they do not drag their children down for their own foolish decisions, especially during this recession. If I have to be the bad guy to slap them with reality, then I will do so if it means their children don't go homeless because of their parents' excessive greed. I am not a nice guy from the get go anyways.
No, this doesn't mean I am back. I am currently waiting for this overseas conference call to begin.
Spot VIX visited and bounced from the 200 week SMA as predicted last month. That's where I theorized the beginning of a possible VIX spike. With closing prices, VIX created lower lows, but the RSI created higher lows. That's the early warning that a VIX spike is beginning to form. It happened in late May and late August 2020.
This doesn't confirm a VIX spike quite yet. This is merely step 2 in the VIX dance. Step 1 was keeping VIX alive with bunny hops... as stated many times before. The next step is a clear ramp-up pattern in the VIX. That doesn't happen immediately. It normally takes a couple of weeks for that pattern to form.
When precisely will the spike happen? Who knows? I'm not going to be married to a stringent prediction. That's the thing about trading. You have to react to patterns and not have a stringent prediction (permabull/permabear). The market gives you data everyday. It's up to you to interpret it rationally and coldly.
How big will this VIX spike be? Smaller than what we are accustomed to. Why is that? This is not 2020 anymore. The conditions nowadays are closer to mid-2010s than 2020. Market breadth is soaring. Sectors are rotating. Can you honestly say that we are worse off today than where we were at the height of the lockdown? Short answer is no. My recent promotion is usually a sign saying business is picking back up again.
I've read some ridiculous calls from Twitter bears that the VIX will go above 50. Why is it ridiculous? ES would have to break 3600 in less than a week or ES just keeps selling off until the 3200s. There are 6 historical trend lines (major supports) and multiple moving averages before 3200. Remember, this isn't 2020 anymore. Let's look at history. The VIX only went above 50 two times in the last 13 years. The VIX went above 40 eight times in the last 13 years. There are about 250 trading days per year. You can do the math in probability.
A very big red flag that the permabear has no clue how the VIX works is if they think it's purely an inverse index. Volatility is the degree of variation in price that is measured by the standard deviation of returns over time... which means the expected move can be up or down. Another red flag is when that permabear thinks a green day in VIX and ES automatically means a warning sign. Again, look at the variation in price compared to previous days.
If I am wrong, which deep down I hope I am, then the market will give you a very big buying opportunity.
And yes, I do call out large permabears and permabulls for giving terrible, account destroying advice. Why? There are many traders who have children and their children might get dragged into their parent's mistakes. In a base philosophy, no child should inherit the mistakes of their parents. It's the parents' job to make sure they do not drag their children down for their own foolish decisions, especially during this recession. If I have to be the bad guy to slap them with reality, then I will do so if it means their children don't go homeless because of their parents' excessive greed. I am not a nice guy from the get go anyways.