Wednesday, May 3, 2017

Not Doing Anything

There is almost no movement.  It is an investor's market.  Not even a swing trader's market, much less a daytrader's market.  They are squeezing out as much volatility as they can.  Unfortunately for bears, when the VIX is hovering around 11, you don't get much downside action.  Of course, you don't get much upside action either.  Back in August 2015, the last time we got a sharp break lower to end an uptrend, the VIX was trading around 14.  In 2014, when you have decent pullbacks in August and October 2014, the VIX was trading between 13-14.

There is almost no precedence for a sharp drop when VIX is trading at 11, or even 12-13.  It needs to be above 13 to have some precedents where you saw near term significant weakness.

This is an unusual market.  I see very little downside, but also, very little upside.  Even though VIX is at 10.7, it seems overpriced here.  It's a boring market, and we can only wait for things to get more active.  In the meantime, we wait.


Anonymous said...

2 to 3 percent selloff to take shake out new longs johnny come latelies. Do you see it happening this month or next?

Market Owl said...

Remember 2 percent is now 48 SPX points. You are saying that we go back down to 2330. I don't see it happening this month. And it could happen next month but probably from a higher level. Just not a good time to short.

Anonymous said...

Hope you are right. Im long x calls right july strike. Im looking to get into qqq puts for 5 percent correction but just cant hone in on when it will happen this year.