What Is the Cboe Volatility Index (VIX)?
The Cboe Volatility Index (VIX) is a real-time index that represents the market's expectations for the relative strength of near-term price changes of the S&P 500 index (SPX). Because it is derived from the prices of SPX index options with near-term expiration dates, it generates a 30-day forward projection of volatility....
This - in addition to almost everything in financial markets ATM - is very scary reading.
S&P500 just flashed a third consecutive (i.e. uninterupted by an equivalent buy signal) Triple Divergence (RSI, MACD and Volume) since the covid-correction on the dialy. Usually, one such signal is a bad sign, but three consecutive ones is just madness.
As you may know, FINRA published the Margin Debt Statistics for July the other day.
As you may also know, tops in prolonged and explosive runs in margin debt usually precede big corrections/crashes in the S&P500 by a couple of months
The Margin Debt reading was down 4.3% from July after 15 consecutive months of increase (!)
Here is my idea on how...
The current market conditions is giving me cause to pause as it relates to putting in buy orders. To me it seems as if the market is poised for a steep correction over the next week or so. My current thesis is based on the fact that the ES-Mini for the better part of this week was priced well above the weekly 3 ATR. What was particularly alarming for me was that...
New all-time highs in the market combined with a creeping VIX are cause for some alarm. Inflation hedges/bets seems to be the talk of late with inflation on the rise.. and this is not unwise considering that money supply is off the chart and velocity is sure to pick up... although velocity is not a necessary component of inflation. Remember that the market is...
I think we are in a macroeconomic state that suggest extreme caution with ones investments, so I would personally rather stack up on something like VIX futures than anything else these days - se the linked post on my macro take).
Note that the big stock indexes (Sp500, Nasdaq, Dow, Nikkei, DAX etc.) also have horrible technicals right now.
Idea for VIX:
- The Short Volatility Bubble will pop.
- Transmutation of Risk cannot make Volatility disappear, only hide it.
- There is an estimated $2+ trillion global short stock market volatility bubble.
- Explicit Short Vol: $60 bn (pension overwriting, VIX, vol selling funds)
- Implicit Short Vol: $1.4 tn (Risk Parity, Var Control, Risk Premia, CTAs)
from a quick analysis of the Vix future we see the volatility which has fallen far below the Bollinger Bands.
This technique can be used for mean-reverting strategies when on the assumption that volatility is cyclical.
I'm thinking to make a nice play on my upcoming correction belief.
Only option I have with my broker is VILX, so started looking into it's history.
Only makes big money with big crashes / corrections, and I think we have two on the way.
Data was so small for the main chart, but looking at the RSI here, some very interested volatility wave patterns.
I'm 100% certain a big correction is coming (possibly barring any stimulus that may scupper this, likelihood is it could even be the cause!) start of Q2 2021.
I want to make a Vix play on this and this is my only option with my broker so been taking a dive.
Straight away, arcs of intent everywhere, clear ebb and flow patterns. Being a fib fan, especially in waves...
Here are some hypothetical numbers I formulated, which by the way you can take with a grain of salt. It is for entertainment purposes only.
Some Tabloids you may find interesting:
80% of the stock market is now on autopilot.
Jun 29, 2019
Algorithmic trading is accounted for around 60-73% of the overall United States equity trading.
Feb 5, 2019
Record inflows and volume reported for vix related derivatives in January. Markets are increasingly getting worried about the bubblenomics that the fed has been pursuing investigating cases like GME may be a symptom of an unhealthy market environment.
Rampant speculation has insisted since March boosting asset values but at the cost of what? This is a money game...