I got a brief scare this morning when I saw the ES was down hard, but it didn’t take long for the market to shake off its fear and power higher. This is precisely what I want because (1) I’ve got a lot of longs (2) I want the market, per my video last night and the post the night before, to get back to an attractive shorting level. As fear leaks out of the market, you’re going to see the XIV (the VIX symbol backwards – clever, huh?) push up. I’m looking forward to bulls feeling at-ease again. The next level we’ve got to cross above is 1864.75 on the ES, so watch it closely. It’s important.
As of 2:00 pm today (Wednesday), and further to my post of October 9th, price in equities has plunged to the next major support level of 60.00, after failing to hold a critical level of 100.00, as shown on the 20-Year Daily ratio chart of SPX:VIX below.
Price on this ratio chart now sits at levels seen during the 2008 financial crisis. A break and hold below this level could, indeed, cause some panic selling in equities…one to watch very closely over the coming days/weeks!
I’ll post an updated chart after the market closes today…check back here for the update.
There is a lot of confusion about the VIX’s high today, because I’ve been stating over and over how I’d cover everything between 22 and 23 on the VIX. The VIX peaked at 20.56 today, as shown with this intraday chart:
I last wrote about the SPX:VIX ratio in my post of August 15th. I mentioned that failure to hold above the 150.00 level would likely see a prior gap up filled, while a break and hold below the 110.00 level would likely see a larger-scale correction begin in equities.
Since that date, price on this ratio finally fell below 150.00 on September 22nd (after re-testing that level and rallying on a dead-cat bounce), as shown on the 20-Year Daily chart below, and closed today (Thursday) just above the 100.00 level (filling the gap in the process). This increase in volatility is not surprising after this ratio pair put in a massive outside bearish engulfing candle on the Monthly timeframe, as I had noted in my post of July 31st. (more…)
First, a bit of shameless commerce – – for those of you potentially interested in joining Slope Plus, remember that this month I’m running a special (the first I’ve had in about half a year) in which you can use the service for free for a month. Just enter the coupon code trickortreat on the Subscription page, and voila, a virtual $29.95 is in your hands!
Now, on to my post………
Back on August 30, I did a post called Past Fear, Present Fear which, it seems, turned out to be really, really, really prescient. I urge you to give the post a glance, but in short, it drew a powerful parallel between the volatility leading up to the financial crisis and the volatility we were witnessing through this summer………. (more…)
It looks like we have another VXX shorting opportunity ahead of us. VXX touched the top of its downward sloping channel and fell away. If it breaks below that trend line we are set up for a nice trade. However, if we push higher this week, we are setting up for a very nice short trade.
VXX struggles outside of its channel.