Waiting a moment to bet on VXXHi,
I'm VIX Man.
Let's wait patiently to get more number of shares.
Always focus on avg down & increasing the number of shares to get rich.
VXX
The Truman ShowSo yesterday turned out to be the worst start to a year since 2016 for markets. However, this morning's sentiment is quite bullish, as investors panic bid the majors at the open. SPY is back at the 50 period MA on the hourly (370.57), which also happens to be converging with the 21 period EMA (370.30). If 370.57 holds up as resistance, we could see a sharp rejection back to the 21 day EMA (368.25). If the 21 day EMA breaks, we'll revisit the white channel around 365, and potentially break through this time, paving the way to the top of the megaphone around 360. If we see increased bullish behaviour as the morning progresses, I suspect we may potentially revisit yesterday's opening levels around 375. Highly unlikely imo, but don't forget there's also a possibility we revisit the top of the channel which would set a new all-time high near 377. Personally, I'm positioned for the bottom of the white channel to fall out, and for a comeback of the almighty megaphone.
Imo you have to ask yourself, what does it matter to markets how the Georgia elections turn out, or who the President is for that matter, when both the dems and republicans are cheering on MMT, while the real economy crumbles? All I hear these days in politics is "Print! Print! Print!" The narratives that explain price action each day, are the equivalent of the story of Santa Claus coming down billions of chimneys in one night to deliver secret gifts to your children while you sleep. They're just stories folks, often with no connection to price action whatsoever. Take eveything you hear and read with a pinch of salt as we must not confuse narratives with truth.
The game is all about reading between the lines, and I'd like to leave you guys with a recent quote from legendary investor, Carl Icahn, "In my day I've seen a lot of wild rallies with a lot of mispriced stocks, but there is one thing they all have in common. Eventually they hit a wall and go into a major painful correction. Nobody can predict when it will happen, but when that does happen, look out below.”
Thanks for your time today guys. If you enjoyed the analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.
Attention, attention! VXX and VIX is talkingAttention, attention!
This is your volatility talking!
We request you to take note of this:
The next two weeks could be volatile because of the Electoral College in the US. The hard Brexit is also hot. Corona is off the air.
The Xth LockDown (then until Easter) will not be relevant until after Christmas.
Until then, the following universal recommendation from the leader's bunker (Führerbunker) applies:
Regularly observe the VIX or VXX and
thereby two times Happy Birthday buzzes.
As soon as doubts arise, rather avoid the contact with the stock exchanges or
for your own security take a hedge position.
Related to the indices:
What does not want to rise - that falls,
or what was the saying?
End of the announcement.
UVXY about to POP?Compare the wedge in the price vs the cRSI. Both look like the are indicating a big move.
Stocks Gone WildHappy New Year guys! I hope everyone had a relaxing and enjoyable holiday season. Let's get right into today's analysis:
Stocks have gone wild! We're seeing essentially every risk asset on the planet melt up as the dollar continues it's slow, and incredibly painful demise. The money supply continues to rise as investors raid their savings accounts, and banks lend their excess reserves in search of more attractive returns than 0.10%, which is the current IOER rate. Based on M1, we can see that investors are clearly raiding what little savings they have left (70% have less than $1,000), as the concept of downside risk becomes folklore, and inflation begins to rear it's ugly head. I think it goes without saying that the line between fantasy and reality has become completely blurred, and so with our hard earned money at risk, we must take this into account, and trade accordingly.
The S&P hit a new all-time high in the overnight session, kissing 3,773.38 before giving back some gains this morning. European and Asian markets are solidly in the green, apparently off the back of the media's favorite 2 suspects; hope, and optimism (around a vaccine). Nothing to do with central banks relentless obsession with parabolic debt levels, and perpetual dollar debasement, only to achieve ever-diminishing (real) returns. It now takes over $7 of debt to achieve just $1 of GDP growth, and the divergence is growing exponentially. Is this greed, fraud, stupidity, or all of the above? Mean while, Crypto, and Bitcoin in particular, are skyrocketing higher as the dollar, and fiat in general, looks increasingly like toilet paper.
Touching on SPY technicals, which we'll discuss further in today's live analysis, the bulls successfully broke us above the megaphone pattern, solidifying it's role as a key technical support going forward. This was a surprise to me, as I expected the bears to show up with a monthly rejection in the final days of December. However, instead we saw no quarter end rebalancing, no profit taking, no selling, and next to no flows into risk protection. It goes without saying, but I'll say it anyway, there's simply no fear in risk today.
Looking ahead this week, we'll be keeping an eye on the Georgia run-off elections, FOMC minutes on Wednesday (for more bedtime stories from Powell's Printer), Thursday's initial claims print, and Friday's payrolls print. As always, I appreciate your time today guys. If you enjoyed the analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.
MASSIVE Demark Weekly SetupWeekly TD9s on SPY+QQQ+DXY+VXX. They aren't super reliable on their own on indices (see QQQ), but with Vol and DXY setting up I would be very careful going into next week...
VXX above 21 day VWMA - Ready to pop?Every time it has been above this level a strong pop followed in the VXX.
Will it retest the band before the pop is what I am watching.
Tomorrow is Quad-Witch/Freaky FridayThe third Friday of March, June, September, and December, is Quad-Witch day. This is when stock index options, stock index futures, individual stock options, and single-stock options, all expire on the same day. On Quad-Witch day, we tend to see a spike in volatility off the back of a roughly 40% increase in volume (on average).
We will see roughly 45% of all S&P options expire in December (18th and 31st), with the bulk expiring tomorrow. Based on the current state of the Put/Call ratio, most of these options are calls. Based on the fact that we're at all-time high's, economic data continues to deteriorate (the best and most timely indicator being jobless claims), Stimulus deal coming any second, vaccines priced in, etc.. I would be on the lookout for major fireworks at power hour tomorrow.
As for today, I suspect we may see the end of the Bearish Harmonic pattern playing out on both the short-term timeframes, and also on a larger scale, shown clearly on the daily and weekly timeframes as well. I'm calling 373 as the top, and then I think it's going to get ugly from there. Let's see what happens next.
I appreciate your time today guys. If you enjoyed the analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.
Possible Bearish Harmonic (15m)Possible bearish harmonic XABCD pattern showing potential upside to 373 in the interm. 373 is the top of the recent ascending channel formed from the Nov 9th high, and Nov 10th low (in white). The top of the channel also happens to converge with the longer-term ascending trendline from the April lows (in green). Let's see if we finally get that monthly (outside reversal candle) rejection we've been waiting on, to take us back below the megaphone trendline.
Homebuilder sentiment is shifting to the downside, and alongside a notably weak retails sales print this morning (-1.1%), we're definitely starting to see growing weakness in the real economy. Apparently congress is close to a stimulus deal, and it sounds like they're serious this time. Let's see if the culmination of stimulus news, vaccine rollout news, Biden winning the electoral vote news, and the real economy breaking down news, is enough resolution bring about a sell-the-news event this week. It's time to prick a hole in the largest credit, and rate driven bubble in history.
I appreciate your time today guys. If you enjoyed the analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.
Buy the Close, Sell the OpenIn a recent report by Bespoke Investment Group, it was revealed that one of the most profitable trades on Wall Street, since 1993, was to simply buy the S&P close, and sell the open. If you did just that alone, you would have seen a whopping 800% return to date, vs. doing the opposite, which resulted in a shocking 10% loss over the same period. According to Zero Hedge, this simple but effective strategy has seen the S&P rise 660 points since May, while doing the opposite has shown essentially no change. On the year, the buy the close, sell the open strategy is up 9.2%, vs the buy the open, sell the close, which is up just 2.6%.
I think it goes whithout saying that markets are being manipulated from every angle imaginable, and it's clearly nothing new. We've all observed the seemingly relentless gap up's, like the one we're seeing again this morning, persistently distorting valuations, and acting as a money printer of sorts. It's frustrating when these types of schemes appear, because you know it's no accident, and market participants are willfully tarnishing the integrity of markets, and along with it, the mechanism of price discovery. Personally, I'm sleeping great now that I have zero long exposure. Alternatively, with little if any upside left in markets, based on my own technical and fundamental analysis, I'm positioned for a repeat of the March crash. I think the megaphone will hold on the monthly, and we'll see a 10% correction in Dec/Jan, at the very least.
I appreciate your time today guys. If you enjoyed the analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.
Stocks Soar on Vaccine RolloutIt's Vaccine Day, Yay! Maybe now, Mr. Market, we can see a sell-the-news event? Don't hold your breath, folks. After a strong gap up overnight, the US Majors are being panic-bid here at the open. Vix is crashing down to a 22 handle, erasing all of yesterday's gains. The Put/Call ratio shows the incredible shift in sentiment over the weekend, going from a 50 handle on Friday, down to a 34 handle on the open. Holy sh*t. The 10Y yield is still hovering just above the 50 period MA on the weekly (.867). The dollar is down to a 90 handle. Asian markets are all in the green, while Eurpean markets are trading mixed. Let's see how the morning session shapes up as we approach the all-time high's, once again.
Stay tuned for live updates throughout the day, and thanks for your time today guys! If you enjoyed our analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. - Hedge.
VIX/SPX indicator showing possible change of direction in S&PMy VIX/SPX indicator is really coming alive this week. It has the same look as August 21 and the following spike in September.
- We are seeing several days of leveling out (Aug 11-26).
- Followed by a green doji candle and a good bullish candle.
- Need one more follow through day and as of 8:46am premarket is indicating that we will see another bullish candle today.
- There is also a clear cross over in the MACD
- RSI just coming off the oversold range
Now we could see a little head fake like Aug 19-26, but this chart clearly looks to me like a decent correction is inbound for the S&P. This indicator does not let me know how big.
I get some questions about using VIX/SPX as an indicator. VIX is not an "inverse" of SPX. Yes they are generally inversely correlated (SPX up, VIX down), but it is more complicated than that since VIX is a future contract based on expected volatility. What is important is that VIX rises exponentially as the SPX approaches a correction. What you see in this indicator is that when VIX is rising faster than SPX you will see a rise (green candles) in the chart.
VIX
VVIX
I have 2 different markups of the S&P and both are show the S&P at the top of a rising wedge.
S&P - Option #1
S&P - Option #2
A 3rd view of the S&P
Do Not Disturb, Drunk on a YachtBoy do I wish that were true. Instead I'm waking up to a freezing cold winter in the North Pole (Canada), and a world on lockdown. It is Friday, though, so I'm in a particularly good mood, and if I must say, watching global markets in the red (for a change), just puts a smile on my face. Yesterday we discussed the potential for further downside, off the back of overbought conditions across multiple timeframes. Overnight, the S&P tested the 100 period MA on the hourly (3644.30), after hitting a session low of 3628.38, just above the gap from Dec 1st. It feels unusual discussing a gap down, as it's been so long since the market has shown any real weakness. I almost forgot what it felt like to see red numbers on the screen on a Friday, but the majors are all down around half a percent, and Vix is up 6% to a 24 handle as we approach the open. According to the financial media, today's sell-off is brought to you by, "Stimulus doubts," and "Disruptive Brexit talks." Nothing to do with the historic valuations, debt, lockdowns, or the crumbling economy I guess.
Today we'll be watching the 21 day EMA around 361.80 for initial support, and if sentiment is actually shifting negative, the top of the megaphone at 358.50 is most definitely in play. We could see buy the dippers panic bid markets on the open, but I have a feeling the tank is beginning to run on fumes. The Vix, Rates, the Dollar, and the Put/Call ratio are all showing strength today, so let's see what happens next...
As always, I appreciate your time today guys. If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.
The Good, the Bad and the UglyAfter trading essentially sideways overnight, futures are seeing some pressure this morning on a weak Jobless Claims print. Initial Claims came in at 853k vs 720k exp. (the largest weekly rise since March), with Continuing Claims rising for the first time since the crash, to 5.76MM vs a prior print of 5.53MM. CPI came in hotter than expected at 0.2% vs 0.1% exp. no big surprise there. The silver lining in the jobs print was the total number of Americans on some form of unemployment is now sitting below 20 Million. That's something I guess? This print isn't reflecting some of the latest lockdowns, so things are going to get worse into year end.
The FDA Panel is voting on Pfizer's new Vaccine, so I suspect a well timed headline may show up to save markets. But, absent a stimulus deal, and an improvement in the real economy, stocks could continue to face downward pressure as we approach EOY. A vaccine approval could also serve as a sell-the-news event, along with any "solution" to the heap of systemic problems facing markets. Clearly every rumour has already been bought, so imo markets are priced to perfection, and can only go down from here.
SPY appears poised to gap down to a 364 handle on the open, with the 100 period MA in play around 363.75. I'm keeping an eye on the gap fill from Dec 1st around 362 (just above the 21 day EMA), and the top of the megaphone around 358.50 for signs of support. Absent support at these levels, the bulls could be in real trouble, with a half a dozen gaps waiting to be filled from November's risk binge, and overnight gap parade, sitting just below us.
Stay tuned for live updates throughout the day, and thanks for your time today guys! If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.
Of Course I Talk to MyselfHey guys, I hope everyone's having a great week! Let's get right into it today. So the majors saw new all-time high's overnight (again), but appear to be experiencing some weakness as we approach the afternoon session. At the moment, SPY is trading comfortably above the megpahone pattern (and longterm resistance trendline) on the monthly, for the first time in over 9 years. We'll soon find out whether or not this is an outside reversal candle. If it is, I'll be praying for the bulls, because the correction will be epic. But, if it's not, and we continue to melt higher (on persistent dollar debasement), then we'll need to either work our position by hedgeing on the long side with minimal leverage and tight stops, or seek out value through a deep analysis of emerging markets. I would also consider holding off risk all together, and parking some cash in gold and crypto. Personally, crypto carries a bit to much beta for my palate, but I'm always comfortable holding gold or silver. First we would need confirmation that the top of the megaphone has been defeated, and is now acting as support on the monthly. Only then would we adjust our strategy.
When you take a look at the SPY on the 3 month timeframe, you'll notice the rsi is in a well defined descending channel, and we're sitting right at the top, where we could see a notable rejection. SPY is at, or nearing overbought levels across every timeframe, which could translate into lower returns in the near term. Mean while, the CAPE ratio is also at all-time high's, confirming limited returns over the next 10 years. Therefore, the justification for taking the risk would need to fall back on the shoulders of the "hope and optimism/recovery," narrative, with the real underlying mechanism driving prices higher, being dollar debasement (inflation).
Jobless claims are out tomorrow, so it's going to be very interesting to see how markets react, considering we rallied last week after a colossal miss, and an ugly print. We all know markets rally on bad news, good news, and no news. Trade accordingly.
Stay tuned for live updates throughout the day, and thanks for your time today guys! If you enjoyed our analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.
Gone in 60 SecondsHappy Friday, my friends! Let's get right into it today. So stocks and bonds alike are experiencing some weakness this morning, after November payrolls came in (much) weaker than expected. After a strong September and October with 711k, and 610k jobs added respectively, Novembers print was a massive disappointment (and miss), with just 245k jobs added vs exptations of 450k. This was the lowest print since we rebounded from the crash back in May.
The sectors most affected were government with a loss of 86k jobs (as Census employees were rolled off), and also retail which saw 35k jobs lost. It's clear that businesses are already starting to cut costs as we head into what may be a brutal winter season. Unemployment dropped slightly from 6.9% to 6.7%. Let's see how markets react in the cash open, as traders and investors digest increasing labour market weakness. Maybe for a change, bad news will be bad news.
Bond yields are spiking, and the 10Y yield appears to be making a run for 1%. We're currently sitting at .96, after a session low of .90 this morning. The majors are up about quarter of a percentage point, but seeing some notable weakness as we approach the cash open. SPY is still moonwalking at all-time high's, and above the megaphone trendine. But, we lost the ascending trendline yesterday at the close, so it's possible the bears finally show up today, and try to recapture the megaphone. I'm expecting December to be an outside reversal candle, with heavy selling as we approach Jan 1. Remember, many of the FED's lending programs expire by EOY, so this could put pressure on risk assets across the classes. Also, many payroll protection programs/unemployement aid, expire in December also, so this could be a bit of a sh*t storm for risk heading into year end. Trade accordingly.
As always, stay tuned for live updates throughout the day, and thank you for your time guys! If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.
Something maybe afoot in the VIXThe VIX is the most oversold on the 1D time frame using the cRSI than it has been during this whole rally and actually in several years. Now, that on the surface does not mean one thing or another. It could mean the market is finally comfortable with the S&P and things are all good. However, what concerns me is the fact that it has not returned back to its mean channel and the MACD is noticeable negative and looking to cross over. The MACD crossover is also not an absolute sign in the VIX either. It can ride along in the positive (green) for quite a while before it makes a bigger move. Another thing to note is that the VIX is sitting right on top of its normal channel. Again, not clearly anything as the VIX has been way above that channel since Feb.
Here is an interesting thing I noticed about the VIX. You can clearly see the correction after the S&P Sept FOMO top at two peaks. Notice that the VIX did not settle all the way back down in between. It stayed elevated during the whole correction and only went back down after the recent rally even though that rally was not that much higher. Now remember that the VIX has not settled back down to its previous levels since it spiked in March. Does this mean we are sitting in the middle of a massive correction and there is still a big drop to come? Don't know, but some food for thought.
Now lets turn to the VVIX. That effective is the volatility of the VIX (derivative of sorts from your calculus days). There we can see a clear trend of a higher lows and a support trend line forming (weekly and monthly). This supports that idea that the VIX should be bottoming and looking to move up. You can also see that it recently (Nov 27) was below the bounds on the cRSI and made a bottom.
I also have my "custom" VIX/SPX indictor. The point behind this ratio is to look for the VIX rising more relative to the SPX. The VIX has a tenancy to go exponential when it goes up, thus we should see VIX increase faster than the SPX and the VIX/SPX ratio should also start to increase (larger numerator over a smaller denomenator). Now, this again is showing signs of life, but the signs are still weak. The cRSI is oversold and the RSI is getting close to a cross over.
All in all, nothing is conclusive yet. However, there are signs starting to show of some form of correction up coming. If you follow my other posts, this is most likely linked to the topping of the S&P at the 1.236 fib level. I am surprised that we are not seeing it rise more like we did at the end of August for the big FOMO top. That 1.236 level is very important. Maybe all the bears gave up? Maybe the bulls have won? I will keep you posted.
