The sudden sharp drop in implied volatility has triggered a tightly correlated decline in the Options Complex Values.
Friday's Gap Up on the Job Report let a large amount of air out. Volumes on the ES, SPY, SPX were abysmal once again.
We suggested that TECH was due for a pullback based upon the TLT, 10Yr Yields and a number of additional causations stated.
The ROC for 10Yr yields caught many offsides, as they were NET Long TLT and ZB/ZN.
We are seeing signs of a repeat of the February 10th ROC breakaway from 1.13 to 1.71. A "Rampage of Rates" on the long end of the Curve demonstrated it wasn't messing around as profligate Fiscal Policies were met with Revolt.
Yields began the highest ROCs in their history - A clear warning sign of issues to come.
The Federal Reserve crossed the Rubicon with "Tools" - Yield Curve Control (YCC) to force Yields lower beginning in April to test the arrangements.
The FED then doubled down in May and June to assure calm.
Since January there has been a large accumulation of Bonds across the Curve - a clear warning sign. One which implies the return of Capital at an assured loss as Inflation is running well above 17%.
"Panic" set in then and fear has only continued to compound.
We remain aggressive buyers of Volatility at levels.
Recall the $0.25 Volatility Options bought to open immediately before the February 2020 collapse.
Wall street ALWAYS gets it fill, we are waiting for this repeat on scale for a large correction. Not a collapse, but a correction,
Currencies Wars are well under way. The DX remains well collared for now: 92/93.
Summer trading is most often "Dodgy" as participation remains Low and the AIQC can move Price just about anywhere it chooses - wanting the high fill.
We are closely watching implied volatility for new fills.
We closed our range trades from 20 to 21.40 with solid gains and are now waiting to see if the CASH or SPOT VIX will trade to 15.00 to 15.50, it is there we will pick the pieces back up into Roll/Settlement.
Its not "inflation" it is nonexistent price discovery and horrible business. If inflation exists why are yields decreasing? Should be the opposite with all that "loose" money.
HK_L61
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@Schmitty69, Good Luck Schmitty. Clear you do not understand the great game.
It's in your face, denial is on you.
It's not inflation, but "price discovery"?
Amazing lack of clarity in that statement.
Again, good luck, perhaps attempt reading the underlying thesis put forth
here nearly every day.
Ignorance is no excuse when it comes to Trading.
I have repeatedly answered your queries, begin there.
Perhaps then you can have an intelligent conversation as opposed to being
another echo.
Schmitty69
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@JRML115847, And no it is not inflation. Why do people get so angry at this concept. Yes prices are going up, but that doesn't mean there is a commensurate amount of increase velocity of money. If every toothpaste factory exploded then toothpaste would be hyper expensive there is no "inflation" as most people use that term.
And if every toothpaste factory is run by a globalist moron who cannot get it to market or they burn their product or something, prices would go up as well. That is not inflation that is just bad business and people that dont find alternatives to manufactured toothpaste are using nonexistent price discovery to promote a broken market. No "inflation" needed, just incompetence.
The bond market is the only active intelligent market currently, and they are telling the morons something about the other asset classes. Why would someone put billions of dollars for 30 YEARS to get 1.2% back with "raging inflation". Thats a no way from me bud.
HK_L61
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perhaps higher of legal team to retrieve the $120,000 bitcoins stolen from you.
then you can eat....
Schmitty69
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@JRML115847, Amazing how sensitive soft people are. Go to sleep little baby.