VIX at the daily view.
The VIX is still doing its dance. Since liquidity is still high enough to hide a submarine, the VIX is making some "bunny hops" to keep itself alive. The purpose of this is to keep it alive long enough for liquidity to dry up again. After all, liquidity tends to ebb and flow in cycles. That said, there is a subtle uptrend starting to form in the VIX along with a slight uptrend in RSI. It's not much now, but it could lead to a bigger spike.
Currently, the VVIX is still above 105. So, volatility is not quite dead yet. That said, the backwardation or premium on VIX futures has been reduced quite a bit since I last checked. The premium on the VIX is much lower than that awful pre-election premium. That VIX longs and shorts almost on equal ground. That said, the sudden lowered premium tells me that traders are shorting the VIX like no tomorrow. My theory is that traders are chasing the post-election VIX crush. Shorting at these levels is not a good idea at all.
Normally, you shouldn't short near supports. You would be surprised how many people don't follow that rule. The higher risk, higher reward trade is to long the VIX. However, we are in a holiday week. Meaning, volume will be very low which the algorithms will likely take over. Judging by the ES, the default movements is sideways to up when volume is low. So, I am not expecting the VIX to spike this week.
What I am looking for is a couple more higher lows or a solid uptrend in the VIX. Right now, it doesn't seem to be in breakout mode. When I mean breakout, I mean more than just 2-3 points.
The VIX is still doing its dance. Since liquidity is still high enough to hide a submarine, the VIX is making some "bunny hops" to keep itself alive. The purpose of this is to keep it alive long enough for liquidity to dry up again. After all, liquidity tends to ebb and flow in cycles. That said, there is a subtle uptrend starting to form in the VIX along with a slight uptrend in RSI. It's not much now, but it could lead to a bigger spike.
Currently, the VVIX is still above 105. So, volatility is not quite dead yet. That said, the backwardation or premium on VIX futures has been reduced quite a bit since I last checked. The premium on the VIX is much lower than that awful pre-election premium. That VIX longs and shorts almost on equal ground. That said, the sudden lowered premium tells me that traders are shorting the VIX like no tomorrow. My theory is that traders are chasing the post-election VIX crush. Shorting at these levels is not a good idea at all.
Normally, you shouldn't short near supports. You would be surprised how many people don't follow that rule. The higher risk, higher reward trade is to long the VIX. However, we are in a holiday week. Meaning, volume will be very low which the algorithms will likely take over. Judging by the ES, the default movements is sideways to up when volume is low. So, I am not expecting the VIX to spike this week.
What I am looking for is a couple more higher lows or a solid uptrend in the VIX. Right now, it doesn't seem to be in breakout mode. When I mean breakout, I mean more than just 2-3 points.