Market Cap per Unit Volatility Reconsidered
On the first iteration of this chart I placed the final position of the third arc in August of 2021 (pink arc), but the placement wasn't sitting right with me. I wanted to incorporate other information including some info from the individual SPX and VIX charts.
1) SPX looks like it could have a top around 4500 based on Fibonacci. That would also give a beautiful overshooting top to the entire pattern.
2) VIX aught to touch the arc in June or July at 19 to 20 before the VIX jumps up and maintains a higher level through the bear market.
3) Markets don't go to the bottom in one fell swoop they take some time to come down. Two years to get to the bottom in the 2000 and 2008 crashes. Coincidentally corporate bankruptcies take about 2 years to work through the courts (less if the company is smaller, more if bigger). So from the SPX top to bottom we need approximately 2 years.
4) If the classic dead cat bounce during the mark down phase is to take place there also needs to be a final rise in the SPX/VIX ratio.
Solution: To accommodate 1 and 2 the SPX/VIX arc needs to include June or July at about 225 (4500/20). To accommodate 3 and 4 the arc needs to end in the summer of 2023. Specifically, ending the arc in August 2023 accommodated all four points.
This placement seemed to fit with the pattern of interest rates that I'm seeing too. The rates should be falling into a crash, not rising as they are now.
The DXY looks like it's lining up for this timing, too, as it has just touched the bottom of it's range and could be heading north.
1) SPX looks like it could have a top around 4500 based on Fibonacci. That would also give a beautiful overshooting top to the entire pattern.
2) VIX aught to touch the arc in June or July at 19 to 20 before the VIX jumps up and maintains a higher level through the bear market.
3) Markets don't go to the bottom in one fell swoop they take some time to come down. Two years to get to the bottom in the 2000 and 2008 crashes. Coincidentally corporate bankruptcies take about 2 years to work through the courts (less if the company is smaller, more if bigger). So from the SPX top to bottom we need approximately 2 years.
4) If the classic dead cat bounce during the mark down phase is to take place there also needs to be a final rise in the SPX/VIX ratio.
Solution: To accommodate 1 and 2 the SPX/VIX arc needs to include June or July at about 225 (4500/20). To accommodate 3 and 4 the arc needs to end in the summer of 2023. Specifically, ending the arc in August 2023 accommodated all four points.
This placement seemed to fit with the pattern of interest rates that I'm seeing too. The rates should be falling into a crash, not rising as they are now.
The DXY looks like it's lining up for this timing, too, as it has just touched the bottom of it's range and could be heading north.
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