November Rain
Mis à jour
Hey guys, Happy Friday! No gap up today (for a change), and we appear to be forming an island reversal pattern at the top of the triangle (350). We're seeing some weakness today off the back of a possible Biden victory, but most of the overnight losses were reversed after a stronger than expected payrolls print.
Some of you might be wondering why Vix is down today over 4% today, while markets are all in the red. This happens sometimes when Vix is at elevated levels, and the market calms notably. Vix has a very erratic negative correlation with equities. Every once in a while, when we're seeing Vix above 30-40 let's say, like we were recently, and the market goes from falling 4-5% per day, to falling just 1-2% per day, on the latter end of the sell-off Vix will be down notably, as markets also fall 1-2%. Realized vol is falling, and so regardless of the fact that markets are down, vix can also be down.
Good luck today guys, and enjoy your weekend!
If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.
Some of you might be wondering why Vix is down today over 4% today, while markets are all in the red. This happens sometimes when Vix is at elevated levels, and the market calms notably. Vix has a very erratic negative correlation with equities. Every once in a while, when we're seeing Vix above 30-40 let's say, like we were recently, and the market goes from falling 4-5% per day, to falling just 1-2% per day, on the latter end of the sell-off Vix will be down notably, as markets also fall 1-2%. Realized vol is falling, and so regardless of the fact that markets are down, vix can also be down.
Good luck today guys, and enjoy your weekend!
If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.
Note
350 is holding up very well as resistance. But, we all know resistance levels don't matter, at least right now, in a market that (seemingly) only goes one way. The way I see it, either markets continue to rise and we all make boat loads of money going long in the stock market, (but all that money buys you is a bag of skittles), or there's an unfortunate shift in the tide coming, that's going to rock the boats. I'm perfectly happy to be net short at these levels, especially if that money is going to be next to worthless anyway. On that note, Bitcoin just came within 5 points of 16,000...Note
Every day this week we've gapped up at the open, and then rolled over (marginally) around 11AM - 12:30PM. Today there was no gap up, so let's see what happens as we approach the afternoon session...Note
Aaaand it's gone... Just like that, all of the morning's losses have been erased, and the majors are now back to even on the day. We're trading right at the lower channel support line, and outside the top band of the triangle. If we break below 349 again, we could see some heavy selling down to the 21 period EMA on the hourly (345.98), barring a well timed headline that 'everything is awesome'...Note
The collateral damage of this week's short squeeze was evident in the Vix:Note
Note
We're not seeing our usual mid-afternoon sell-off today. We're trading sideways at the moment, and technically just lost the bottom of the intraday channel. The top band of the triangle is still holding up as support, and if this is a triple top unfolding, a 355 handle is still in play, where the all-time high's, and long-term Green trendline converge. If this is an island top reversal pattern, and we're seeing a rejection off the upper band of the triangle formation, then we're going back to 320 over the next week or so...Note
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Volume is quite weak as we approach power hour, and we continue to drift sideways. Let's see if the floor catches up with the price before we end the Cirque du Soleil of trading weeks...Note
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Vix is getting relentlessly beaten lower, and is now sitting at a 24 handle. We're down a whopping 10% on the day. There's no such thing as risk, just don't look down...Note
That's all folks! The bulls held the 350 level, and continue to dominate price action. It was an ugly week, with short squeeze after short squeeze, inflicting maximum pain on the bears, only to be followed by more pain. But, the bulls are running out of room here in this historic rally. We're approaching a convergence at the long-term Green trendline, and the all-time daily closing high around 355, which would complete the triple top pattern. I remain one of the few bears left standing, and won't let go of my principles or my 'limited edition' shorts. I trade with discipline, and I'm never greedy, so I see no reason, notwithstanding than the large unrealized losses in my account, to change my position.I hope everyone had a great week. It was certainly an interesting one, if not a historic week. It's time to unwind, and relax with a cold drink. Until next week guys, enjoy your weekend! Cheers, Michael.
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