I'm telling you from trial and error, don't put to much faith in the Vix. Price action is all that matters, if you want to make money in the markets. You will be left behind waiting for the Vix to confirm your trades. Price action is saying buy the dips for now, thatâs all you need to know.
I misspoke when I said today. but today 40 was tested. Monday will be the game changer/confirmer in my opinion. Look for a gap one way or the other then it's off to the races.
I'm an intraday scalper so trust me I wouldn't have survived if price action wasn't my only guide. But I do take a step back and look at the big picture too (for entertainment purposes only) and this was just an interesting observation that I think makes good sense. On a related note the VIX has ALWAYS screwed me over when I used to trade the options. I was right every time but still could never make money on it so whats the sense in that?!? One other mistake that I made earlier in my trading career was to keep a swing trading account. It would often times cause me to be biased toward the positions I had in that account so I only daytrade now. The only time one should do both is during a nice peaceful steady bull market. Only day trade in a market like this cause you never know what the rules are going to be tomorrow and the game changes too many times to make sense of it.
Flip, Why it is a big deal for VIX at 40. Market still sell off when VIX is at 30. I guess it predicts S&P move 40% in a year. It seems lower VIX tell you market will be less volatile either up and down. Wondering what determines VIX anyway?
Yessir, the uncertainties have definitely magnified in this environment. Tape reading and being in cash at close makes a lot of sense.
I also look at short etfs and they appear to be moving to normal levels. I hear what you mean, this rally IS overdone, overpumped/overdumped...as usual. Given the complete lack of visibility. VIX hedging as a result of no confidence? I have lost all confidence in the markets these last couple years. Doesn't mean you can't still trade them for the pos that they are. While on topic with the VIX, you could look at other indicators, such as gold. Despite the big rally gold has been holding ground very well even getting nice pops from day to day. Gold is a fear indicator, so that should of told us all something right there.
Gold's not just a fear indicator of markets going down, though. There's two types of fear today - fear of the market crashing and fear of runaway inflation. Not saying whether those fears are right or not - but they're there. So, I don't think gold will necessarily track stocks.