What Are You Going To Do Now, VIX? 8/10/2020
VIX at the 4 hour view.
The VIX did something a little unusual. The VIX poked below tier II support below, but closed right above tier II support (second dotted green line). In addition, the VVIX closed right above 110. The VIX refuses to give up since the Put/Call Ratio was around 0.66 today. Normally, below 0.75 is considered extreme on the buy side. However, we are living in abnormal times now. This means the VIX recognizes the Put/Call Ratio as a possibly buy climax and exhausting the supply of buyers. So, the VIX acts as both a fear AND greed gauge. You just have to interpret it. You can tell if it's greed when the VIX increases while the ES increases as well.
I found out why on the ES. To my ES post, the ES has been in an ascending wedge for several days now. The lower intraday range is what's lowering the VIX. In addition, high liquidity is also pinning the VIX down since the ES refuses to have a decent pullback.
Interestingly, the ascending wedge on the ES should be resolved either tonight or tomorrow. I had a date range for the volatility jump on the VIX between 8/10 to 8/12. I don't think this is a coincidence at all.
The ES is primed for a correction. However, high liquidity levels on the MCI and NFCI indicate that the correction will be delayed until liquidity levels finally reach weakened levels. That doesn't happen overnight. That usually takes weeks, possibly months to get there. I would not hold my breath for it.
What does that mean for the VIX this week? If the ES pulls back immediately and not do a blow off top pattern, then the measured move of the pullback would be about 80-90 points. Due to high liquidity levels, volatility jumps (more like a hop) would only last 1-2 days. I'm not expecting a "bigger" volatility jump until the ES reaches the previous all-time highs. Why? Bears are looking for a double top pattern. But again, I am not expecting a crash. The trend will be over all up until liquidity levels actually reach weak levels.
What will it take for liquidity to lower faster? Please see my ES post earlier.
The VIX did something a little unusual. The VIX poked below tier II support below, but closed right above tier II support (second dotted green line). In addition, the VVIX closed right above 110. The VIX refuses to give up since the Put/Call Ratio was around 0.66 today. Normally, below 0.75 is considered extreme on the buy side. However, we are living in abnormal times now. This means the VIX recognizes the Put/Call Ratio as a possibly buy climax and exhausting the supply of buyers. So, the VIX acts as both a fear AND greed gauge. You just have to interpret it. You can tell if it's greed when the VIX increases while the ES increases as well.
I found out why on the ES. To my ES post, the ES has been in an ascending wedge for several days now. The lower intraday range is what's lowering the VIX. In addition, high liquidity is also pinning the VIX down since the ES refuses to have a decent pullback.
Interestingly, the ascending wedge on the ES should be resolved either tonight or tomorrow. I had a date range for the volatility jump on the VIX between 8/10 to 8/12. I don't think this is a coincidence at all.
The ES is primed for a correction. However, high liquidity levels on the MCI and NFCI indicate that the correction will be delayed until liquidity levels finally reach weakened levels. That doesn't happen overnight. That usually takes weeks, possibly months to get there. I would not hold my breath for it.
What does that mean for the VIX this week? If the ES pulls back immediately and not do a blow off top pattern, then the measured move of the pullback would be about 80-90 points. Due to high liquidity levels, volatility jumps (more like a hop) would only last 1-2 days. I'm not expecting a "bigger" volatility jump until the ES reaches the previous all-time highs. Why? Bears are looking for a double top pattern. But again, I am not expecting a crash. The trend will be over all up until liquidity levels actually reach weak levels.
What will it take for liquidity to lower faster? Please see my ES post earlier.
Comment:
And the VIX just broke its wedge. Right in the middle of my date range. Looks like I still got it.