VIX at the daily view.
VIX is still finding support below. The VIX did a forced support test a couple days ago and it wasn't enough to launch. That said, the RSI divergence is still there. However, it is still subtle.
This shouldn't come as a surprise. Holiday weeks are notoriously low volume and they tend to float sideways to up. So the ES would stay largely stagnant which decreases volatility. The VIX stayed elevated due to a low P/C Ratio. That alone is not enough for the VIX to enter into a spike. The VVIX closed below 105. However, since this week is a holiday week, it might be an outlier from the norm.
It brings up the question. Is the VIX permanently elevated? When TSLA joins the ES, the VIX might stay elevated due to the volatile price action that TSLA brings in.
Anyways, the VIX is still continuing its dance. Liquidity is still relatively high and market internals don't show any immediate danger. The next two weeks will determine if we are going to get a correction by price or a correction by time. Since I like volatility, I prefer the former.
The VIX still shows no sign of a ramp up or uptrend. In fact, the VIX is most likely forming a bottoming pattern. The RSI divergence takes time to actually enact. So, we might see the VIX just float between 20-23 until the RSI divergence kick starts a ramp up. Right now, there is a lot of short interest in the VIX - as if newbies are chasing that post-election VIX crush. It doesn't quite affect the VIX itself, but it may actually affect its trading instruments (e.g. ETFs) with a short-covering rally. The premium is still much smaller than pre-election. So, there is not much backwardation to fight through when longing VIX.
What's the issue? Trading the VIX requires a lot of patience and precision. Two elements that most new traders do not have. Most get too excited and long VIX at the beginning of the bottoming pattern. ETFs tend to decay a little due to loss of interest during that phase. The lower risk trade is to either wait for a legitimate ramp up to long from or short after a big VIX spike. The former exchanges missing the bottom with better risk management (avoiding decay). The latter is just business as usual being a naturally lower risk trade.
VIX is still finding support below. The VIX did a forced support test a couple days ago and it wasn't enough to launch. That said, the RSI divergence is still there. However, it is still subtle.
This shouldn't come as a surprise. Holiday weeks are notoriously low volume and they tend to float sideways to up. So the ES would stay largely stagnant which decreases volatility. The VIX stayed elevated due to a low P/C Ratio. That alone is not enough for the VIX to enter into a spike. The VVIX closed below 105. However, since this week is a holiday week, it might be an outlier from the norm.
It brings up the question. Is the VIX permanently elevated? When TSLA joins the ES, the VIX might stay elevated due to the volatile price action that TSLA brings in.
Anyways, the VIX is still continuing its dance. Liquidity is still relatively high and market internals don't show any immediate danger. The next two weeks will determine if we are going to get a correction by price or a correction by time. Since I like volatility, I prefer the former.
The VIX still shows no sign of a ramp up or uptrend. In fact, the VIX is most likely forming a bottoming pattern. The RSI divergence takes time to actually enact. So, we might see the VIX just float between 20-23 until the RSI divergence kick starts a ramp up. Right now, there is a lot of short interest in the VIX - as if newbies are chasing that post-election VIX crush. It doesn't quite affect the VIX itself, but it may actually affect its trading instruments (e.g. ETFs) with a short-covering rally. The premium is still much smaller than pre-election. So, there is not much backwardation to fight through when longing VIX.
What's the issue? Trading the VIX requires a lot of patience and precision. Two elements that most new traders do not have. Most get too excited and long VIX at the beginning of the bottoming pattern. ETFs tend to decay a little due to loss of interest during that phase. The lower risk trade is to either wait for a legitimate ramp up to long from or short after a big VIX spike. The former exchanges missing the bottom with better risk management (avoiding decay). The latter is just business as usual being a naturally lower risk trade.