I wasn't expecting VIX -3.63% to break 25, especially after *CPI* reading yesterday. There is something that this move down in VIX -3.63% and up in SPX 1.34% has nothing to do with the fundamentals IMHO. Technically it makes sense and I can follow the rationale of TA experts that are much better than me at that as I'm not an expert. From the fundamental perspective, I believe, this market has to reprice down as yields on 10y and 30y are rising. You are getting higher in US, 3 hikes are the less we can expect for FED, and playing with a DCF model I believe the price should be much lower. TNX 0.21% are responding accordingly to higher rates expectation but USD and equity are not. Now low volumes are not helping price discovery too and the price can, therefore, drift higher according to TA. So this is the environment I don't like but it is what it is and I want to understand how to play it intraday.
Comments for the day ahead:
I wasn't expecting VIX -3.63% to break 25, especially after *CPI* numbers yesterday.
losing momentum below 25 rapidly. If it remains below 20 I think it will decrease further and therefore SPX 1.34% has a green light on continuing the recovery. I think there is a chance and a risk that yesterday was a trap to squeeze out the Vol longs. In that case, I will watch out carefully that VOL does not start increasing again and going to close the gap around the 25 areas. If that happens I will expect another sell phase in equities.
If VOL remains below 20 I will no probably enter any trade until it drops below 17. If VOL breaks down on the downside the line “Bus-stop 1a,1b” then I will go long on the SPX 1.34% with tight stop loss. Target to close the intraday trade will be decided according to the SPX 1.34% level but ideally around “Bus stop 2 line” on the chart or close to the lower line of the channel.
Hope you enjoy it this is my first chart looking forward to your comments, critics, and observations. Any suggestion how to improve this first post is highly appreciated.
Thanks to Dankh aka @dkh and @Sophia715 for being always in the chat and sharing your ideas. I always follow you and learn a lot from your comments even If I'm not participating in the chat actively!. Hope to start giving back some of what I'm learning but I’m still in the learning phase and I guess I will make a lot of mistakes in my analysis so please keep in mind reading my comments that I’m not a professional!
Have a nice day!
Looking on the SPX chart
Price is between 20 MA and 50MA with 10MA moving up.
Price outside and below the rising channel
line 1/1 will be a resistance
2575 16/02 daily high will be a resistance
2747 (0.618 Fib) will be a resistance
Intermediate resistance level (reversion zones) are 2753-2745 from 16/02
Note: Volatility still higher than the rising channel on the VIX chart.
I took no position yet today still waiting. Channel is broken on the upside. Wait for 20/02 H line tag if it goes up from there next resistances as mentioned above.
I added a corrected channel (red dotted lines) to take into consideration the recent price development. If the lower channel line is respected I think it will important to look at it instead of the first one.
Ner channel with (red dotted lines) not relevant to the VIX price action it has been tested briefly but that support has been taken out so I will continue to watch the old channel. My guess is that MM want to put the VIX future curve in contango again to trap more people on the short (VIX) side.