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VIX CBOE Volatility Index

Technical Expectations, 12 Mar 2023🖼 Daily Technical Picture 📈 ➤ Most of you don't come to me for my thoughts on the fundamental aspects of the market environment and I don't usually offer them. There is however one particular aspect I think is worthy of mention. ➤ By now most of you should have read about the fundamental state of affairs in regards to SVB (Silicon Valley Bank). There are huge ramifications in regards to the further potential fall-out. ➤ If the fear or actual contagion takes place with similarly positioned banks or financial institutions then the next "target" would once again entangle the crypto space. Silvergate was the pre-cursor. But the "BIG" one or the "last man standing" is Signature Bank through its "Signet" service. ➤ Signet is as I understand it the basic backbone or gateway of fiat-to-crypto capital flows. It is the infrastructure for capital movement between the two worlds. If Signature Bank gets into trouble, the knock-on effects on crypto might be crippling at least in the short-term. Let's face it, crypto is not yet mature enough to be it's own self sustaining ecosystem. Anyway that's my take on this matter. I stand corrected. ➤ Back to the technicals, although we saw continued selling in equities on Friday, there was some late buying at end of day and into after-hours trading. I cannot tell you if this was dumb money bargin/dip buying or smart money taking advantage of the sharp drop. ➤ The VIX spiked to 28 before receding. For me, the panic level in equity markets is for a move in the VIX to 30 or beyond. We didn't get there. Of course, any contagion fear or otherwise should move VIX much higher. If it doesn't, it should be an "all clear" sign at least in the short-term. ➤ Conclusion: What will be important is the messenging by the US regulatory authorities and how market participants react to it. I would expect some sort of clarification or official stance taken prior to markets opening in Asia on Monday. Silence or a message that doesn't allay fears may result in a bad outcome in the short-term. NOTES: $BTC and crypto price is holding well despite the most recent developments.
AMEX:SPYShort
by mrstockyetoro
Banking on Disaster: Fed Continues to TightenThe Federal Reserve's extreme tightening just caused the second-largest bank collapse in U.S. history (in nominal dollars). In this post, I will explain just how far the contagion is likely to spread, and why this is likely just the start of what may be widespread liquidity crises. In early 2022, in order to mitigate the record inflation it caused, the Fed began hiking interest rates. By mid-2022, the Fed was raising interest rates at the fastest pace on record. The rate of change (or ROC) in Treasury yields began to rise parabolically. Below is a chart that I posted back in August 2022 to show how extreme the rate of change was for the 2-year U.S. Treasury bond yield. Since bond prices move inversely to yields, bond prices began to fall sharply in 2022 as yields were rising. In October 2022, I posted the below ratio chart of TLT and M2SL to illustrate the immense wealth destruction that holding Treasury bonds was having for investors and institutions. I warned that what was occurring is destabilizing. To understand how I used the ratio chart of TLT and M2SL to conclude that, due to the Fed's extreme tightening, destabilizing wealth destruction was occurring for bondholders, you can see my post below. By late 2022, it became a mathematical certainty that liquidity crises would occur. Many market participants who were holding extremely low-yielding bonds were experiencing extreme losses because of the Fed's extreme rate hikes. Such losses are unrealized unless the bondholders are forced to liquidate while yields are much higher than when the bonds were purchased. For those who recall what happened in October 2022, pension funds in the UK were forced to liquidate their highly leveraged bond positions at a loss due to margin calls. This caused the Bank of England to quickly pivot in order to avert a major liquidity crisis for pension funds. Silicon Valley Bank ( SIVB ) however was not as lucky as UK pension funds. SIVB was at the forefront of the central bank-engineered liquidity crisis because of its unique clientele: debt-dependent start-ups. As liquidity was being destroyed by the Fed at a record pace in 2022, start-ups, which are heavily reliant on debt and cheap money to continue operations and generate growth, began to draw down their deposits as cash evaporated and borrowing became more expensive. This in turn forced SIVB to liquidate its bond holdings at a major loss, similar to the UK pension funds in October 2022. Once Silicon Valley Bank reported this major loss to the public, the market suddenly began to fear its viability. Within days, the bank collapsed. The collapse of SIVB occurred with an estimated 85% to 96% of all deposit amounts not being FDIC-insured. This means that most of the $175 billion in deposits at the time of the collapse may be partially or totally unrecoverable. Two things about the bank's collapse are remarkable: First, the unprecedented speed by which the bank collapsed and was seized by the FDIC, and, second, the overwhelming majority of the money deposited in the bank was not FDIC-insured. This is quite concerning because such a lack of FDIC insurance on deposits undermines the public's faith in the FDIC to maintain banking stability. Such a lack of insurance also causes actual liquidity contagion. Circle, the company that manages the USDC stablecoin, has confirmed that $3.3 billion of its U.S. dollar reserves were in the now-collapsed bank. At the time of writing, Circle does not know if or when the FDIC will come to the rescue. It's possible that neither the FDIC nor the U.S. Treasury comes to Circle's rescue, as neither entities are eager to support the cryptocurrency industry, which undermines U.S. dollar hegemony. The FDIC, therefore, faces a major conundrum: Maintain the public's faith in FDIC-guaranteed banking and ensure there is no liquidity contagion, at the expense of acting as a protector of stablecoins and cryptocurrency, and more generally, increasing moral hazard. Nonetheless, this fear that the FDIC may not come to the rescue has caused USDC to de-peg from the US dollar. Each USDC is now worth less than one US dollar, as shown in the chart below. Upon seeing USDC rapidly de-pegging, the cryptocurrency exchange platform, Coinbase, decided to temporarily freeze USDC conversion into U.S. dollars, forcing a reprieve in USDC's de-pegging. Nonetheless, at the time of writing, USDC is still teetering on the brink of collapse, having lost nearly 90% of the Tether ( USDT ) in its 3pool currency reserves. USDC instability is now spilling over into other cryptocurrency spaces that rely on USDC maintaining a stable value. One such space is the AAVE protocol. AAVE is an Open Source Liquidity Protocol that operates on the premise that only "low-risk tokens" such as USDC be used as collateral and as a lending pool reserve. Now that USDC has de-pegged from the U.S. dollar, any collateral that was pledged in USDC is now suddenly worth less. This is destabilizing the liquidity and reserve structure of the AAVE protocol. AAVE currently has $6 billion of locked liquidity across its networks. Although it is possible that the FDIC can fully resolve the crisis caused by the Silicon Valley Bank collapse, it is likely that volatility may persist, especially when Coinbase resumes USDC swaps. In a worst-case scenario, USDC may follow the same trajectory as TerraUSD (UST) in May 2022. In this scenario, the shockwaves will be felt not only across the cryptocurrency space but also in the Treasury market. If too many stablecoin holders suddenly demand dollars, it could force a liquidation of Treasurys on reserve. Circle currently has over $32 billion worth of Treasurys in its reserves. Although this may not be significant enough to destabilize the multi-trillion dollar Treasury market, it can cause positive feedback and can increase fear in the market. This series of events was predictable and expected. The root cause is the central bank's monetary policy. The Fed is destroying the money supply at the fastest rate on record. Since the Fed is still tightening, which has a long and variable lag effect, the liquidity crises we're seeing now are likely the tip of the iceberg. The fact the Fed is still tightening so deep into the start of a financial crisis is unprecedented. When Lehman collapsed in September 2008, for example, the Fed had already pivoted over a year earlier (in August 2007). Now, it seems that a financial crisis is already underway but the Fed remains unable to pivot due to record-high inflation. Eurodollar futures are still demanding that the Fed hike rates. The Fed is therefore trapped. It must choose between runaway inflation or widespread liquidity crises. The yield curve is deeply inverted. This is a reliable indication that a recession is coming. The fact that it has been inverted for a while, and is deeply inverted, may be foreshadowing the extent and duration of the coming recession. In my post below, I explained why I believe that the most likely outcome is severe stagflation. The Fed is in a Catch-22, and there's no way to avert some kind of a crisis. Indeed, the coming years will likely reveal to us what the consequences are for decades of limitless monetary easing. Important Disclaimer Nothing in this post should be considered financial advice. Trading and investing always involve risks and one should carefully review all such risks before making a trade or investment decision. Do not buy or sell any security based on anything in this post. Please consult with a financial advisor before making any financial decisions. This post is for educational purposes only.
by SpyMasterTrades
19
Approaching a pivotal week for the S&PThe S&P500 / ES is sitting right at a critical point which I believe will break this week or next The weekly chart shows that the S&P is now above most key moving averages, including the 200 moving average (displayed in black), the 20 moving average (displayed in white) and the 50 moving average (displayed in yellow). Also it has broken above the upper resistance trend line (displayed in red), these are all obviously very bullish but a few major headwinds remain that may upset this upwards momentum. Price last week touched the 100 moving average (displayed in blue) but then rejected back down to end up finishing right at the Fib Extension 0.236 level. Ironically the 100 moving average has been a menacing level that has been difficult for the S&P to break through, 7 weeks ago and 21 weeks ago exactly the same touch and rejection of the 100ma occurred. Further to this we are about to enter one of the most bearish seasonal periods of the year for the S&P, I've included a seasonality indicator in my chart which shows 3 year, 6 year and 9 year tendencies and they all have exactly the same downwards pattern starting in February. The indicator below the Seasonality scan is RVI (relative volatility index), this is good for measuring both the volatility along with direction. Inline with what the market has been doing the past few years the RVI had been generally trending up and created a support line that was largely unbroken from end 2018 - Jan 2022, and since been broken the RVI is now showing a downwards trend and instead of a support line there is a resistance level over head that price is close to approaching. The last indicator on the chart includes Larry Williams Vix_Fix which had turned red recently (2 bars/weeks), signalling we are in historically low volatility period in the VIX, most traders know that large moves often follow periods of very low and/or contracting volatility. This last indicator also includes a display for the bond yield curve and this is currently shown in the maroon/deep red which confirms a fairly long period inverted curve which is also known as a precursor sign of recession and market sell off. The recent closed weekly candle was an indecision candle so this week that is coming or perhaps the one that follows should tell a lot about where the market will be heading over the course of the next few months A bullish bias would mean Price this coming week will disregard the seasonal bearish tendency and instead break above both the 100ma and the 0.236 Fib and close the week above these levels. A bearish bias would mean Price has closed back below the resistance level on the chart (both price resistance & RVI resistance) and price has tracked the normal declining seasonal pattern that plays out around this time of the year. I see more chart evidence of a coming decline than an incline but in any case we still need to wait for direction confirmation which should look like one of the above scenarios. So it is time to pay very close attention to the charts and In the week that follows the market direction confirmation signal I suspect we will see some large and fast moves of either sideline money coming into the market to cause one last blow off top before some kind of recession sell off later in the year or heavy selling as these key levels get rejected and the seasonal sell of takes hold.
CME_MINI:ES1!
by gary_trades
SPX | Early AccessI have posted about this chart before, but I wanted to show it more clearly this time. Above we see SPX, the standard chart. Below we see a custom index I invented, which is VVIX/VIX. It is a neat way to make sense of the chaotic nature of VIX. To clear things out, I have hidden both charts and instead I show an indicator called WLSMA. It is tremendously helpful to smoothen the "fog" the standard chart creates. In the end I will add the link to the inventor. I took great care on drawing these trendlines. I tried to get into the mind of the investor back then, and drew the lines that best made sense, and could provide some actual meaning. On the chart, red arrows are drawn. These are the times when the VVIX/VIX chart violates decisively it's trendline. On the same dates, I created arrows on the SPX chart to get an idea of just how early this method warns us. While this method may not be useful for traders (I am not a trader, I am just passionate analyzing charts), I find it incredibly interesting on how these two correlate, and make actual sense. I find VIX by itself completely useless. Don't get triggered by what I said. How on earth is VIX = 20 a good buy-in strategy? It is as about as useful as RSI getting below 80. Again don't get triggered by it and flame comments down below. Numbers and money don't mean nothing. It is perspective and values that make sense. Now onto some charts: In 2008 we were notified from VVIX/VIX all the way back in February of 2007, and got a confirmation on April of 2007. This is not a typo, 1 year before the GFC. Curiously, this happened when FED's tightening schedule was near it's end. Also interesting is the April-September period of 2008, when the VVIX/VIX chart showed signs of hope when it broke above it's trendline. And compared to now: We can conclude similarly for the 2010-2015 period. And the 2016-2020 period. And the 2020-2023 period of course. Are we approaching this hopeful period before the crisis? A comparison between 2008 and 2023, in the period of deadly hope. Link to the inventor of the WLSMA indicator: Tread lightly, for this is hallowed ground. -Father Grigori
SP:SPX
by akikostas
4
Taking A Swing, 10 Mar 2023🖼 Daily Technical Picture 📈 ➤ I'm probably being overdramatic by saying all hell has broken loose but it certainly looked that way from my perspective with today's equity performance. The VIX certainly portrayed it by spiking much higher. ➤ Equities experienced the biggest daily drop this year. It is an acceleration of the drop from the Feb 2 high. It was only yesterday that I was more in favour of an upward swing. Today's price action clearly have swung it back to the Bears. ➤ It's finally time. Continuing with my cricket analogy: The ball was delivered to my liking and I have taken a big swing of the bat. Will I be able to score some runs or will I get caught? ➤ Is this just the beginning of a fast and furious drop or will it be a short-lived affair? In the case I am right. The downside targets are 387, 380 and 370 on the SPY. ➤ Conclusion: I am Short with full risk after today's price action. NOTES: S&P500 looks to have moved decisively away from the 200 day moving average.
AMEX:SPY
by mrstockyetoro
𝗧𝗲𝘀𝗹𝗮 𝗨𝗽𝗱𝗮𝘁𝗲: $TSLA Daily. 180 Support Lost5 waves down all the way to ~100 to end 2022. Huge bounce all the way to 200dma and key resistance area that has rejected. 180 support failing ... looks like we'll move towards the gap fill at 145 Through the first 2 months of 2023, retail investors have bought ~$10B worth of Telsa, more than any other stock/ETF (compared to ~$4B of $SPY). What could go wrong? 🤓 $QQQ $NQ_F $NDX $AAPL $MSFT $GOOG $AMZN $SOX $ES_F $SPX $TLT $TNX $VIX #Stocks 📉
NASDAQ:TSLAShort
by KobesyTrades
The Probabilities Have Swung, 9 Mar 2023🖼 Daily Technical Picture 📈 ➤ Equity prices finished the day slightly up countering attempts for a further fall. Following-on from yesterday's note, that means there was NO FOLLOW-THROUGH by the Bears. ➤ I think the probabilities now favour a short-term reversal higher for the Bulls. A lacklustre uptick in the VIX with such a Bearish day yesterday was perhaps the first sign the probabilities have swung. ➤ As a Trader, I play the market based on probabilities. Let me explain this in keeping with my cricket analogy but this time from the perspective of the Batter. The Batter will play a shot depending on the type of delivery s/he receives from the Bowler just like in Baseball. The choice is to leave the ball or hit the ball with varying strength and direction. The more the ball is pitched to your liking (or to your strength), the higher the chance of your success of putting runs on the board. ➤ This is why in recent days I have not offered a shot and have let the ball "pass through to the keeper". Of course I want to trade but the market conditions have not offered balls delivered to my liking. I therefore watch closely, keep my concentration and wait. ➤ Conclusion: A shot at shorting the market is not out of the question but another day like today will see me take a Bullish shot. NOTES: S&P500 is still firmly attracted to the 200 day moving average. Price continues to whipsaw.
AMEX:SPY
by mrstockyetoro
Great down day for $SPY (+25% return)Shorted $AAPL at close to yesterday's high ($155-156) for a close to 25%+ gain with SPY being down -1.53% today. What comes next? 1/ TESTIMONY DAY 1 $DXY ripped through the supply zone during Powell's testimony. $SPY bulls will want to see DXY make it back in the zone for SPY to move 401+ which has acted as near-term resistance (anything goes when it comes to Powell). 2/ POSITIONING UPDATE Still holding my swing position for $AAPL (see previous linked idea). I expect more drawdown before I consider trimming,
AMEX:SPY
by theapearmy
The Follow-Through, 8 Mar 2023🖼 Daily Technical Picture 📈 ➤ Equity prices ended the day sharply lower. It was either this or the other way round. I hope you chose the right side. I'm still sidelined. ➤ It's not all bad being sidelined. I get to think and write more in regards to my insights into markets and their behaviour. ➤ As I said, NO trade was triggered today. It was close. Now I await the "follow-through". I'm pretty fond of that term because it first resonated with me through watching one of my favourite sports: Cricket. ➤ The "follow-through" action of a Fast Bowler in Cricket is very important. It's the ending action after the ball is released. It's vital for a Fast Bowler who steams in at great pace to have a smooth ending action in order to direct the ball as s/he wished, reduce chance of injury and not to be penalised for running on the pitch. It's all a bit technical but it's very important. ➤ A follow-through is just as important when it comes to market movement. It is important for the Bears to see a continuation of today's action tomorrow. Without a proper follow-through, this down move will be reversed easily. That's what I'll be looking out for tomorrow. ➤ Conclusion: A good follow-through to the downside would almost certainly see me leave the sidelines and become a short-term Bear. NOTES: all price gaps have been closed. VIX did not explode higher as it should have.
AMEX:SPY
by mrstockyetoro
2
Don't Fall for VIX Volatility Dead Cat Bounce“Happiness was never important. The problem is that we don't know what we really want. What makes us happy is not to get what we want. But to dream about it. Happiness is for opportunists. So I think that the only life of deep satisfaction is a life of eternal struggle, especially struggle with oneself. If you want to remain happy, just remain stupid. Authentic masters are never happy; happiness is a category of slaves.”
TVC:VIXShort
by noam_chom
2
Strange Happenings, 7 Mar 2023🖼 Daily Technical Picture 📈 ➤ Equity prices ended the day flat after the initial Bullish momentum carried over from last week. Strange was the out-sized relative underperformance of the Russell 2000 small cap stocks. It sold off quite aggressively. What's a plausible explanation? Interest rates? Maybe it was just one of those days... ➤ BTW, I forgot to mention this: Last Friday was the 10th CONSECUTIVE Friday that equities ended the trading day with a green candle i.e. higher close than the open. What's with this pattern of events? What will happen this Friday? ➤ I don't read too much into today's price action. It maybe some anxiety with upcoming economic data and blabbering Fed mouths. It isn't a reliable signal to say if prices will reverse lower or it was just a temporary pause in upward momentum. ➤ Conclusion: It's 50/50 on the direction of the next trade. Market is leaving me guessing.
AMEX:SPY
by mrstockyetoro
2
Wen 420 $SPY? Hold up buster.1/ WHAT HAPPENED? It's no secret that the past 2 days attracted tons of buyers and bullish sentiment on Twitter regarding $SPY 420+. My take: Unless we see a definitive break above ~$408 (see chart), this'll be another bear rally. I'll be evaluating this as the week progresses. 2/ MY POSITIONING - Taking an initial short on $AAPL $145P 5/19 this week -- a #SPY sympathy play with potential for further drawdown. Keep in mind resistance at $156.40. - Based on market price action, I may also consider shorting $SPY. Patience is crucial given #JPOW is back on 3/7-3/8. 3/ PREPARING FOR THIS WEEK | $VIX - Despite notable macroeconomic problems (i.e. inflation, earnings declines, and rate hikes), VIX is lagging in strength. To curb the recent upward trend, I'm hoping for $VIX to remain above its February low, approximately at $17.5. 4/ PREPARING FOR THIS WEEK | $DXY - To see more $SPY drawdown, I'm looking for clear upward movement above ~$105.2 beyond the supply zone. To reiterate, I am long-term short, but cautious of how price action will play out in the near term. Like and subscribe for additional insights on the market outlook and my approach as the market continues to unfold. Good luck trading this week!
AMEX:SPYShort
by theapearmy
Marching Higher? 6 Mar 2023🖼 Daily Technical Picture 📈 ➤ My current view of equity markets is based on today's chart colour scheme. Green and a bit of grey. ➤ With a strong rebound higher in markets over the last couple of trading days, I think things look pretty Bullish. The trend from the October 2022 bottom is Bullish. It is a series of higher highs and higher lows. The classical definition of an uptrend. ➤ It looks like the Sellers have dried up. All the selling has been absorbed by the Buyers. Everything pretty much adds up to the Bullish tone. ➤ The only grey is the price structure that I look at (my secret sauce) remains not so clear. There is not yet a trading signal for a BUY and there is still a reasonable possibility to go SHORT. ➤ How prices evolve this week will almost certaintly settle the case and we should see a trade soon enough. 🤞 ➤ Conclusion: Looks can be decieving. 🥸
AMEX:SPY
by mrstockyetoro
2