VVV
CBOE VIX VOLATILITY INDEX
95.56POINTD
+0.90+0.95%
At close at Jul 16, 20:15 GMT
POINT
No trades
VVIX trade ideas
The Great Bear Stealthily ReturnsAfter 7 years of rising political tension, grassroots chaos, turmoil, war, viral zombie apocalypse, massive East-West cultural shift, digital gambling combatted with unprecedented money printing, political finger pointing and social bipolorization, and an almost unshakable popular belief in optimism and the rise of AI and technology to "fix" the fundamental problem of the human heart, ignoring those already flattened by inflation, it took the return of the flamboyant golden boy to finally bring an end to the delusion.
I never imagined it would last so long.
The Great Bear
I'm not even confident it has truly returned.
Yet this signal strongly suggests so.
I was one of those bears obliterated over these seven years.
Still, I believe few will really see it coming when it does arrive. The P/C ratio at a measly 0.8 backs this statement.
Warning to the bulls. Courage to those bears still around.
This is not a short term analysis or trading advice. It is a long term narrative about the human psyche based on technical analysis.
The Crash Ratio Indicator Part 2This disconnected market stretched its life for yet another month since the crash ratio indicator went nuclear in August and now heading down again. This time I show the longer time scale including the GFC. Seems like quite an important historic indicator. When this baby goes bottom up RED it's time to pay attention! Can it predict the future? We shall see.
Nothing fundamentally has changed. The BS decoupling everything financial from reality and causing (inflation) pain to nearly everyone has stretched for 5 years. One day reality will strike back.
The Crash Ratio IndicatorPosting this one as well for the annals of history. I probably haven't updated this chart for two years. The insane red cliff drop finally arrived. How to prepare? Not really sure anymore. This market and economy has utterly frustrated, exhausted and depleted me. I quit and moved on to more meaningful things in life. Whatever the future brings, just bring it on.
How low can the VIX goI guess it could go to zero, but perhaps it will stop going down once the VVIX/VIX hits the trendline. The long term trendline is shown along with the 4h trendline
Worth keeping an eye on this chart as long-term as over the last few years it called some tops and bottoms
not financial advice
VIX WARNING RALLY is SHORT COVERING SQUEEZE like I said The chart posted is the VIX of the VIX the VVIX has the cycle which I stated on monday and friday last week a short squeeze is now setup as the13.8 to 15.2 week decline would see a sharp rally. And that the IYT RSP BA and TNX were making a ending of a 5WAVES pattern we are only going to see an ABC rally and the last 5 days have been wave A so CAUTION I think the wave strurture in TLT is that of a wave 4 it should not get above 88.3 if that is the correct count then we will see a print of 81.5 to 79.6 and the VIX will be well into 29.6 to 38 so take any profits NOW
SPX | Don't fall for the trap...SPX is plowing through higher highs. It is a runaway train.
Have you entered that train yet? You better enter it because SPX will soar!
But runaway trains have the fate of collapsing in on themselves.
Their weight is too much for the foundation to sustain.
Not all is SPX. VIX is also attempting to measure the risk involved in SPX.
And VIX is as bullish as it gets.
But not all is VIX.
It is important to analyze the volatility of volatility. We are really entering inception levels here.
Volatility is too low and too stable . It is as if it is pressured to make all-time-lows. With such a low VVIX reading, we can conclude that VIX is having no second thought on dropping even further.
Curiously, the VVIX/VIX ratio is a neat SPX tracker.
I have posted about it ages ago.
So what can we conclude about volatility?
Historically, similar volatility traps have lead to severe crashes in the stock market.
Will this time be any different?
So what is in for the future?
Perhaps an all-time high for SPX will come first.
It is not that far...
Then, perhaps some SPX divergence against VVIX/VIX. SPX to move higher with VVIX/VIX moving lower. And then darkness.
Tread lightly, for this is hallowed ground.
-Father Grigori
Guide to VVIX/VIX Ratio Regimes and Corresponding Investment StrMarket volatility and its expected future changes, as indicated by the VVIX/VIX ratio, can greatly impact investment decision-making. The following guide provides insights into different regimes of this ratio, their implications on market conditions, potential sector rotations, and additional investment strategies that investors might consider.
High Ratio (High VVIX, Low VIX):
In this regime, apparent calmness belies underlying uncertainty about future volatility. This suggests a potential underestimation of future risks.
Sector Rotation: A strategic shift towards defensive sectors—Consumer Staples, Utilities, and Healthcare—can help. These sectors are often resilient during uncertain times due to consistent demand for their services and products.
Options Strategies: Look at strategies like long straddles or long strangles. These profit when the underlying security experiences a significant price move, regardless of the direction.
Risk Parity: Adjust your portfolio by distributing risk evenly across different asset classes rather than allocating based on expected returns.
Bond Laddering: This involves buying bonds that mature at different times. It provides regular income and reduces the risk of being locked into a low-interest-rate environment.
Low Ratio (Low VVIX, High VIX):
In this regime, high current market volatility is expected to continue, signaling turbulent times ahead.
Sector Rotation: Defensive sectors, including Utilities and Consumer Staples, provide stability during turbulent times. For those with high risk tolerance and a long-term perspective, cyclical sectors like Technology, Consumer Discretionary, or Industrials could present buying opportunities.
Volatility Trading: Consider securities that are designed to track volatility, such as VIX futures, options, or volatility-focused ETFs and ETNs.
Dollar-Cost Averaging: This strategy involves investing a fixed dollar amount in a particular investment on a regular schedule, regardless of the asset's price. Over time, this can result in a lower average cost per share.
Distressed Assets: Market turbulence often results in some assets being undervalued or "distressed." Savvy investors may find bargains in this space.
Stable or Mid-Range Ratio:
A moderate level of expected market volatility signals a stable market environment.
Sector Rotation: Investors might consider cyclical sectors—Technology, Industrials, and Consumer Discretionary—that are likely to benefit from economic growth.
Buy and Hold: This strategy involves buying stocks or other assets and holding them for a long period. It is based on the belief that in the long term, financial markets provide a good rate of return despite periods of volatility.
Growth Investing: This strategy involves investing in companies expected to grow at an above-average rate compared to other companies.
Momentum Trading: This involves buying securities trending up and selling those trending down. Stability can enhance the predictability of these trends.
Understanding the nuances of the VVIX/VIX ratio and its implications on market conditions can help investors align their strategies with market volatility regimes. Whether rotating sectors or applying different investment strategies, it's important to remember that all strategies carry risk and must align with individual investment goals, risk tolerance, and market outlooks. As always, it's important to consider a variety of market indicators and economic factors before making investment decisions. This guide serves as a stepping stone towards informed investment decision-making during different market volatility regimes.
can you feel it? can you smell the change in the air?Can you smell what the market is cooking?
mmmm
Reward based behavior is term I learned this year for a concept Ive been studying for many years.
Behavioral finance.
The markets are wild because people are wild.
we get too greedy, then reality shifts. then we panic. then it shifts. and that panic was a fire sale. rinse and repeat.
because math is hard and those who dont know how to explain it to those who need to know.
its hard.
its another language.
Im not saying I know, but I am trying to let the knowledge seep in my dense monkey brain.
any who, panic is on the weather forecast.
have a good day.
kthanxbye.
VVIX Lowest ADX Reading in History - WARNINGThe weekly ADX indicator is sitting at 8 (NO TREND) at the same time VVIX reached it's lowest value since March 2017. EXTREME COMPLACENCY can be presumed. A market without fear is DANGEROUS. Either markets continue higher in the face of continuing rate hikes & QT or markets SELLOFF & VIX spikes catching everyone offsides. I go with the latter. Expecting VVIX ADX to SURGE WITH $VIX. Protect your #kingdollar. HEDGED for crisis with $UVIX $UVXY. GL
Financial (in)stability mechanismsI have posted many times regarding volatility, especially the VVIX&VIX relationship.
There are times when mechanisms need to activate to stabilize the economy, the psychology, the society. Recessions, wars, pandemics are periods that may justify such actions.
It is wise for an investor to understand pressures and their direction. The motto "Don't fight the FED" and "Don't go against the trend" should be applied everywhere.
A very rapid growth like in 2016 needed suppression, or else equities would have gone parabolic.
Increasing yields makes growth harder. So the thought process back then was to suppress growth. I have some theories on why they wanted growth suppression. My ideas are extreme as they are, so I will try to put them into the suppressing field.
After this parabolic growth that occured backstage, the recession nobody remembers ocurred.
Yields suppress growth.
Yields as a stability mechanism.
Yield increases however can cause the opposite problem, money scarcity and liquidity problems.
Yields cause recessions.
Yields as an instability mechanism.
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Now onto VIX.
This year's recession was a time when financial stability had to occur to calm the markets. Back in 1929 we didn't have such mechanisms. The main chart, VVIX, shows us that there is substantial volatility management backstage.
While I don't know the mechanisms for SPX and VIX stabilization, I have some theories. There are now massive hedge funds that can easily stabilize the equity/derivative market. VIX is a traded index, so hoarding contracts could in theory artificially change the VIX value. That is why I advised on volatility analysis by comparing VIX with volatility indicators.
Hedge Funds (amongst other mechanisms) suppress volatility.
Smart Money as a stability mechanism.
I have posted before about the VVIX/VIX chart and how it can help us analyze SPX growth stability.
So the question arises, how much and for how long have markets been manipulated? Surely in 1929 there was nothing one could do to stabilize the markets. That is why the recession was so deep and painful. We had no brakes.
Manipulation/stabilization works in a consistent manner, when VIX peaks we suppress it. Suppression works by making VIX more predictable and less spiky. So inherently VIX manipulation decreases VVIX. With these charts we can see the stabilization mechanism in action.
In the middle of the 2008 recession, in May-June we had this period when psychology briefly changed from pessimism to optimism.
It is the denial phase of psychology. More about that in the "VIX | The effect on SPX" idea linked below.
It is this vicious cycle during the VIX manipulation period that drags us further down inside the recession.
VIX suppression cycle pulls economy into a vicious cycle.
Stability mechanisms as instability mechanisms.
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Onto some speculation:
Perhaps we are in a long-term recession, since 2018. Again, look into "The Cake is a Lie" idea.
Back in 2018 we were in a recession while equities were rapidly increasing. Now we are growing with equities dropping. This is nuts!!!
Look at this VVIX/VIX chart comparison.
In this chart I have hidden the price of VVIX/VIX and left just the EMA Ribbon. That is what we live through now. I drew a retracement from this specific point in time so as to better pinpoint the possible targets for VVIX/VIX.
This chart suggests that we have never went through the crisis since 2018. I know this is crazy to say, but look at this chart below.
RSI divergence confirms that. Perhaps the RSI of SPX correlates better to the VVIX/VIX chart.
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Conclusion:
So where does this leaves us? The fact that we have passed through two periods of upside down phenomena (2018 and 2021), when equities were increasing in a recession, and vice versa. This troubles me, as to how much is hidden. How big of a problem are we in and we have just not realized it yet. Moral of the story again? Don't believe what you are told and what you are shown. Don't listen to me as well. Do your own research.
There may still be massive volatility ahead of us. VVIX is suppressed by more than 30%. If VVIX returns to normal levels ~120 and the VVIX/VIX targets are correct, this means that VIX will increase 3.5x from what it is now. As a number it makes sense because it takes us to the peak of the 2020 Black Swan. VIX has every possibility to go incredibly high.
QE and Stabilization Mechanisms themselves have caused this fog. In our attempt to stabilize the economy, we have clouded our vision.
The suppressing field will be shut off, on the day we have mastered ourselves. On the day we can prove, we no longer need it. And that day of transformation, I have it on good authority, is close at hand.
-Dr. Breen
VIX | The effect on SPXI would like to do some qualitative analysis on VVIX/VIX, and it's behavior/effect on markets. We will try to pinpoint some "wave types".
A. The most consistent/stable growth for SPX occurs in times of stable VIX and stable VVIX. Their ratio remains the same.
B. At times of decreasing VIX and increasing VVIX, we have an unstable, impulsive upwards wave. This occurs after a VIX peak. While everyone expects a lower VIX, as time passes markets get increasingly indecisive about the future of VIX. Therefore VVIX increases. VIX measures the sentiment of SPX, while VVIX the sentiment of VIX.
C. A period of unusually low VIX leads to speculative growth. This growth in the end, traps both the VVIX/VIX chart, and the price chart.
D. In the above waves, VVIX/VIX is either trending up or horizontally for prolonged periods. A variation from it is a period of prolonged VVIX/VIX drop. During this period, sentiment is homogenous, everyone believes that VIX will increase. A consistent belief in the VIX fate, is pushing VVIX lower. An unusually low VVIX describes a period like now, or 2008. Everyone is preparing for the drop.
Some examples will follow:
D WAVE (2008-2009)
I have highlighted two very important points during this drop.
First, the small circles. This is the point of a rapid sentiment change. Curiously, this point is many months after the FED is done with rate hikes. It is actually when it begins to drop rates.
The big circles are in a period of denial, a period during which everyone believes that the bottom is in. VVIX/VIX attempts to escape the descending channel.
B WAVE (2009-2011)
A WAVE (2012-2015)
C WAVE (2016-2018)
I find very interesting the retracements that occured after this rapid growth.
C WAVE (2020-2021)
D WAVE (2022)
Just like 2008, the shift in sentiment in September 2021 is very apparent. Likewise, now we are witnessing the period of denial.
As a final thought, what we are witnessing with the D waves is not the effect of FED, it is the effect of sentiment on it's own.
We witness the specific points of sentiment change, which don't depend (?) on the FED hike schedule. And curiously, they are in identical spots as in 2008. One before the peak, one in the point of denial.
Perhaps what everyone fears is the terminal rate. Or we fear the drop, we fear of losing. I don't know...
How VIX follows SPXVIX is a measure of volatility. It takes the last 30 days of SPX, and measures it's variance.
I would guess that VVIX does the exact same thing to VIX, it takes the recent 30 days of VIX, and measures it's variance.
These two, along with SKEW are some of the methods investors calculate risk. I don't have the technical/financial knowledge on the ways investors can use risk management for better financial decisions.
If we do some "magic" we can transform these notoriously unchartable indices.
I am aware that since VIX takes the value of SPX, gets affected by both the volatility and the price of SPX. So technically from it's nature VIX tracks SPX.
If, for example, we plot the chart (1-VIX) we will see the following:
As we already know, he inverse of VIX follows SPX. Low volatility equals high SPX.
The calculation logic of the chart is: Scale down VVIX such that it is in a similar scale to VIX. Then subtract one from the other.
SPX is scaled down, after we divide it by M2SL.
I would guess that from 2009 to 2019, the growth was sustained because VIX was consistently low.
I also noticed that VVIX this year is incredibly low. One would expect that with such this year's recession that VVIX would also pick up the pace. During periods of very high volatility like the Great Recession, VVIX tracks VIX. Not this year however...
As a fellow trader pointed out quite some time ago:
Now VIX is higher and it's behavior with VVIX is very similar to 2008. We could say that the current situation is much similar to 2000 or with 1970s with stagflation and not 2008. Some things however, they smell foul. The elephant in the room maybe...
SKEW is in an all-time low. This could encourage investors to over-expose. THAT is when crashes happen. Overexposing when liquidity is being dried up from the FED, is a recipe for disaster. Even if we grow from here and everyone wins, who will have the money to pay back all these winnings? Especially now, with everyone investing like crazy, over-leveraging and such. And if EVERYONE is buying, who is selling? "Buying the dip" is part of the equation...
I believe that the bottom is NOT in yet. And since charting indirect stuff like VIX, like housing, yields, energy, all point to the same direction, I cannot ignore them.
PS. The elephant is the collapsed worldwide-production-chain. The elephant is that we are one step away from war or famine. And maybe, just maybe, the elephant is long gone... we just don't know it yet.
And we are talking about how the DOW will not fall. We are convinced that we are in the bottom and we are buying the dip. We are dreaming of more money quicker.
Tread lightly, for this is hallowed ground.
-Father Grigori
I am not a trader, I am a father of a cat named Alyx. Don't take what I say as trading advice.
VVIX vs VIX - What can we tell from itBelieve it or not - The Stocks volatility index (VIX) has it's own Volatility index (VVIX) - and if we compare the two, it looks like VVIX has touched onceagain bottom trendline - how did that reflect on VIX?
VIX bottoming was always delayed for 9 to 100+ days after VVIX bottomed.
What to expect ? That in an average range of 40+ days VIX should bottom and start going up - And according to my overall analysis - we are just before a big fall - therefore this is the last moments for stocks.
In other words - Bullish until EOY.
