VIX compression

Updated

The vix has a history of forming explosive price wedges. It wouldn't be a stretch of the imagination to say we're forming a new wedge here. Also, I suspect that we're on the verge of a new upward wave in volatility from here- it might just be a lower high in a new wedge. The market has gotten way ahead of itself and there are just too many new traders piling into popular stocks. They are fish in a barrel and the cork is about to get pulled. The sentiment is absurd and we now have some of the lowest put:call ratio's I've seen in my years of trading (shorts squeezed out). I'm hoping for the market to retrace 50% of the last fed rally but I would be thrilled to see lower lows by Nov-Dec. Take a look at the other chart below on VIX weekly timeframe and notice the very clear cycle lows/highs with the sine wave on stoch/rsi indicator.. We're very close!

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take a look at vix on weekly- there are obvious price cycles and I would venture to say we're at the bottom of this cycle:

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I forgot to include the 2008 one..

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This little wedge is on 60min time frame but it's worth watching. These wedges occur often on various time frames in the vix and this one could signal a bit of a correction in the market soon. This could be the beginning of the next larger leg up in the vix within that other larger wedge. I am expecting some type of market cycle low between now and Nov. It's possible this wedge is just one part of that movement

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it looks a lot like april 2019 or July 2018 zone.. I will often study the ETF's that track the vix to grasp the internal workings and hone in on a projection.. hindsight is clear so look in the past to predict the future.

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There has been a lot of confusion the last few days about the vix- it has appeared to be lagging or doing the opposite of what it normally would.. I have a clear explaination. It's a hidden bear divergence pushing vix down.. Eventually this pattern will most likely break and the vix will rip & roar.. but the question- does it get pushed down further for a few more weeks? idk.. Notice the price decline in vix compared to my stoch/rsi indicator showing the hidden bear divergence.. YES the vix is highly technical

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I've been amazed at how the lid has been kept on volatility into this correction since early this month. It seems to support my suspicion that the vix is in a new price wedge and might be in the process of making a lower high. Looks similar to 2015-16 when the market made a 2nd drop and a new low but volatility made a lower high

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This is important- I've made some adjustments to my forecast.. I don't think I've grasped the size of this. I now suspect.. YES, more volatility heading our way.. hooray! However, I think I can make a strong case for a continued bull run until near end of 2022. I think we'll see volatility through election and some type of market top near mid 2021. We should witness several large waves of volatility but with the real possibility for much higher prices in the indices.. This goes against my last few years of analysis but the CB's are likely to blow the lid off this market.

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what a year

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I played this divergence both long and short. This 3x hidden bear had a lot of power and threw a lot of people off.. including myself. I had put options in the market turn against me despite the market dropping in September.

This is important! Here's what I'm seeing and thinking going into the US election: Watch for continued volatility next few months but don't dismiss the possibility of the vix and market moving up together. It's not likely but it's just a curve ball to watch out for. I'm heaved to and waiting patiently for the wind to get right. These are tricky times.

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that was a very clever fakeout before the election. It would appear that smart money was selling calls to retail traders right into election and then the vix dumped. I was prepared for this but I must say I was rather convinced that the vix could spike up even with a market going up. I had some calls (as a hedge) in s&p and small caps to prepare for the big spike we had up in the market but I'm still looking forward to the next larger wave of volatility. Get ready- I think the next few months will be choppy

gghsusa

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