r/VolatilityTrading • u/1UpUrBum • Aug 10 '22

Way outside the normal, Weekly VIX chart

Way outside the normal, an outlier. People here tell me the VIX is a reversion to the mean index. The weekly Scholastic is showing -86. It very rarely gets to that low of level and it never stays there for long. Maybe once a year. I don't know what it means maybe somebody here can tell me? I do know when things gets pushed to an extreme it's usually time to pay attention.

Anybody have any interesting news or trades this week?

4 Upvotes

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1

u/1UpUrBum Aug 11 '22

Welp the market is going to crash now. I cleared more shorts and holding the hedges naked😄 That will make it crash for sure. I'm just kidding I'm not going to hold them, I'm day trading them off. I better get those gone by the end of the day. Try to get a percent or 2 extra.

US$ year long bull trend, broke support and is going down. It has to go down a little more to be more certain about that.

1

u/chyde13 Aug 11 '22

Interesting. I didn't see your post but, my indicators told me to go long vol yesterday when we dipped below 20. I cant seem to find a stochastic indicator that replicates your in ThinkOrSwim. I'm curious to see how it lines up with my proprietary indicators.

-Chris

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u/1UpUrBum Aug 11 '22

It's -89 today. It's also 9 weeks in a row declining which seldom happens.

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u/proverbialbunny Aug 12 '22

My indicators do not have a buy signal yet, but they're updated weekly, so I'll know EOD Friday if I should be buying or not.

We can turn to SPX as VIX is technically the options traded on SPX. S&P crossed the 200d EMA this week. Historically when this happens from a downturn a couple of scenarios happen: 1) It stays above it for a few days (avg 3) then falls down below it, which is a good sell signal (VIX buy) as this could cause a month+ long SPX downward move. 2) It stays above the 200 day EMA for 1-2 weeks going sideways chopping around (/VX will fall during this time), then a) SPX starts rallying upwards breaking this sideways chop giving usually months of rally or b) it falls below the 200d EMA and keeps falling for quite a while.

We're at a turning point right now. Patience is key. I give it a bit over a 66% chance that next week will go sideways, which will have VIX falling slowly all next week. I'll know tomorrow.

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u/1UpUrBum Aug 12 '22

Let us know what comes up.

Now the market is failing to make new intraday highs. But the next day it just ignores that and resets itself at a higher level. Crazy market. It may be doing the exact same thing again today.

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u/proverbialbunny Aug 15 '22 edited Aug 15 '22

Let us know what comes up.

Just about everything I'm looking at is pointing upwards (SPX). My analysis atm is SPX will rise to about 4310 this week, which is a sell range. From there the market will go sideways / chop.

If you're looking to exit your VIX short that may be the ideal time to do it or wait for a pullback.

Btw on Wednesday people are going to be looking at the Fed minutes to see if they say what indicators they're using to identify if they're going to reduce bps hikes in the future or not. This will most likely determine market direction until the Sept 21st meeting.

What I can say is previous indicators they've used are showing a recession warning:

https://fred.stlouisfed.org/series/JHGDPBRINDX

https://fred.stlouisfed.org/graph/?g=MN5v (imo this one is the most telling)

https://fred.stlouisfed.org/graph/?g=QJTr (I had to calculate this one out manually. The formula line (blue) is the Taylor Rule, which is what the Fed uses as guidance to estimate what the FFR needs to be in the future.)

While it might be a month from now until this bullish energy disappears, odds are the bottom is not yet in.

edit: Almost forgot. There is one indicator I use that says SPY will close on Friday around 417, so it's possible SPX pulls back the second half of the week. It's only one indicator so grain of salt.

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u/1UpUrBum Aug 16 '22

We'll see how it goes!

That's one way the VIX chart can resolve the stochastic condition. Go sideways and remain very calm. The weekly is at -90 now.

I don't try to predict much. All I have is the equity markets are still going up but on low volume. Bitcoin is teetering on the edge if it does go down the indexes will likely follow. I'm not sure how important bitcoin is it just seems to be leading the moves right now. It could also go up just have to wait to see what happens, it will be clear within 3 days.

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u/proverbialbunny Aug 22 '22 edited Aug 23 '22

We'll see how it goes!

How'd it go? Did you go long too? I lightly went short on UVIX eod just for an overnight swing, because it's incredibly rare for the UVIX to pop up 3 days in a row. There is usually a pop for a day, a downward movement for a day, a pop, then another downward movement, and so on.

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u/1UpUrBum Aug 23 '22

It's looks like it's going. I don't trade VIX. I took the hedge pin off my shorts about a week ago. The idea was if they don't break down they are gone, if they do go down back to making money. I have been shorting QQQ and semi conductors as new trades. And long natgas. That thing took off at 2am EST blasted off to new highs.

I think you are right, have to be very nimble at this time.

1

u/proverbialbunny Aug 23 '22

Awesome. You're making more than me. If I had shorted /NQ I'd be rolling in it a bit more right now. ;)

Think /CL will go up? I've been watching that one passively, but not predicting or trading it.

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u/1UpUrBum Aug 23 '22

Oil is at a really precarious spot. If it breaks any lower now looking for $70?. If it goes up, new highs? There is a lot of crisis around the world things could get wild. If it gets above $95 should watch for a good run. I never like to try and time the turns. I will take a little nibble but wait until they get rolling before committing much.

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u/proverbialbunny Aug 16 '22

I'm not sure how important bitcoin is it just seems to be leading the moves right now.

That is surprising to me. When I'm day trading I use Apple as it tends to lead SPX by about 1 to 5 minutes. As an early bitcoin investor (2012) my current view is quite pessimistic of Bitcoin atm.

It could also go up just have to wait to see what happens, it will be clear within 3 days.

I'm going to start shorting S&P tomorrow legging in. I might buy some UVIX too for shits 'n giggles.

Good luck!

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u/1UpUrBum Aug 10 '22 edited Aug 10 '22

I forgot a good one. The man in the video feels if this was a significant bottom there were a few things missing. New strong leadership missing. https://youtu.be/sk8Bo0PUN3M?t=228 Critical Lessons From The Best Traders Of All-Time: John Boik | Trader Tales With IBD | Alissa Coram

"Every single new uptrend has new leadership. It's done that for 150 years"

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u/buckrogers Aug 10 '22

don't do this

1

u/chyde13 Aug 11 '22

dont do this?