VIX at the daily view.
VIX finally broke its downtrend and RSI downtrend. It seem to have bounced off of the white pivot line (for now).
April seems to be set as a rollercoaster of a month. There is earnings season which provides some liquidity. At the same time, the US tax deadline is coming up (April 18th). The wealthy usually wait until the last minute to cash out to pay their tax liability. The bond market has been sinking like no tomorrow since QE ended. At the same time, money mainly shifted to defensive sectors (e.g. utilities, healthcare, and consumer staples). Push-pull.
On Twitter, I saw posts a month ago calling for VIX to be above 50. As stated before, it would be pretty hard for the VIX to break 50 unless the Federal Reserve does something highly expected like hiking rates to 5% by end of 2022... which is unlikely as it would require several conditions to reach that level of desperation.
There is another reason why the VIX would have a hard time reaching 50 in the next few months. The VIX is the measurement of implied volatility within the options market of the ES/SPX. Options is not the entire market. Bigger investors have not been using options as much to hedge their portfolios. In a clever way, bigger investors have been using futures to hedge their portfolios. Why is it clever? Futures qualify under section 1256 which is not 100% short-term capital gains. It's a tax advantage. VIX would have a hard time to measure the implied volatility if the bigger hedges are heading into the futures market and not the options market.
This is why most have a hard time understanding the VIX. It's a piece of the puzzle. You have to look at the bond market, credit market, FOREX market, options market, and individual sectors to see the full picture. Furthermore, one needs to master timing and risk management as well. Most traders think they know everything and stop learning after a few wins. Most become trapped in their dream of an epic crash or rally. The VIX doesn't care about your dreams or opinions. It's algorithms and formulas.
VIX might have an uptrend leading to May FOMC. The Fed minutes indicate that quantitative tightening might start as soon as May instead of June/July. Furthermore, OPEX and taxes are coming up. That might cause some whiplash. VIX might be back to elevated levels again (above 24). I won't be surprised to hover above 24 for a little while. As for timing it, that's the issue. With hedges being split between options and futures, timing VIX spikes became even harder.
VIX finally broke its downtrend and RSI downtrend. It seem to have bounced off of the white pivot line (for now).
April seems to be set as a rollercoaster of a month. There is earnings season which provides some liquidity. At the same time, the US tax deadline is coming up (April 18th). The wealthy usually wait until the last minute to cash out to pay their tax liability. The bond market has been sinking like no tomorrow since QE ended. At the same time, money mainly shifted to defensive sectors (e.g. utilities, healthcare, and consumer staples). Push-pull.
On Twitter, I saw posts a month ago calling for VIX to be above 50. As stated before, it would be pretty hard for the VIX to break 50 unless the Federal Reserve does something highly expected like hiking rates to 5% by end of 2022... which is unlikely as it would require several conditions to reach that level of desperation.
There is another reason why the VIX would have a hard time reaching 50 in the next few months. The VIX is the measurement of implied volatility within the options market of the ES/SPX. Options is not the entire market. Bigger investors have not been using options as much to hedge their portfolios. In a clever way, bigger investors have been using futures to hedge their portfolios. Why is it clever? Futures qualify under section 1256 which is not 100% short-term capital gains. It's a tax advantage. VIX would have a hard time to measure the implied volatility if the bigger hedges are heading into the futures market and not the options market.
This is why most have a hard time understanding the VIX. It's a piece of the puzzle. You have to look at the bond market, credit market, FOREX market, options market, and individual sectors to see the full picture. Furthermore, one needs to master timing and risk management as well. Most traders think they know everything and stop learning after a few wins. Most become trapped in their dream of an epic crash or rally. The VIX doesn't care about your dreams or opinions. It's algorithms and formulas.
VIX might have an uptrend leading to May FOMC. The Fed minutes indicate that quantitative tightening might start as soon as May instead of June/July. Furthermore, OPEX and taxes are coming up. That might cause some whiplash. VIX might be back to elevated levels again (above 24). I won't be surprised to hover above 24 for a little while. As for timing it, that's the issue. With hedges being split between options and futures, timing VIX spikes became even harder.