VIX - Daily - 5.12.16.png
VIX daily. This is not investment advice.
I'm going for Vix down Stocks up over the next 4-5 days. Dink do you think any of those "sit and chat" slopers will have the gonads to put there best "guess" in? As best I can tell they "chat" all donf't care what we say.
I do not think this is a bear flag, especially considering VIX floor is in the 10-10.50 level mathematically. I believe it is building a base for a move higher. The only other period that resembles this that scares me is the 2003-2005 period when the Fed was priming the R/E bubble and suppressing volatility. VIX just crushed traders on the long side for an agonizing period of time, only to blow up a few years later once everyone threw in the towel trying to trade long vol and scalp their daily gamma. I do not think this is a repeat scenario. Yes, this time is different. The FED is looking to normalize (allegedly). The world is in a collective race to devalue currency in order to monetize massive debt to GDP. We have a tenuous election narrative. And we have lost leadership on an already narrow base of market stocks. I think the internals cannot support the There Is No Alternative investment thesis into perpetuity. Cash is a position, although a deflationary position at that. I believe this is the root cause for the renewed interest in grains and metals. VIX up, market down is my call. Springheel Jack has a great piece about NDX, RUT, and SPX setting up H&S pattern which I completely agree with. The one caveat; a busted H&S pattern is one of the most powerful moves you can attempt to shoot against. Having said that, I do target the 1950 area in SPX to coincide with a VIX trade up to 19-21 range.
Given that the bull market since 2009 is still alive and well, I am going to predict the VIX will head lower and the markets head higher. Look at how the VIX respected that rising trendline 5 times before breaking lower, and when it did break below, it did so with gusto and a gap, and any retracement higher for the VIX has been weak and sideways in nature. That tells me that the market is pricing the odds of a risk event as very low and continues to be low until the VIX hits that green band down near $11. Maybe then the markets will fall, but for now the market appears to be forming a bull flag triangle consolidation in preparation for another ramp higher, probably to all-time highs before Hillary wins the election come November.
1950/1960 first Dink, but I respect your opinion.
The VIX is back up to that upper resistance line. I think it is going to hold below it and fall back down to support. Only a move above that resistance would indicate a downmove in the markets that is sustainable.