Sunday, April 6, 2025
VIX - Retest of August 2024 Highs Coming
VIX has been in an expanding pattern and once it broke out, SPX plunged 20% to start. Volatility started to heat up last summer and has experienced three unusual spikes since in a short period of time. Volatility is continuing to expand and that suggests lower markets are coming. SVXY is breaking down from the uptrend and heading lower. Daily charts
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One of the clues that this turmoil was coming was that on the VIX daily chart, the 50 average is still in a golden cross from last year. So it is a highly volatile environment.
ReplyDeleteThe 10% tariffs became effective on Saturday and the larger tariffs are due to take effect April 9th. I'm expecting VIX to continue to rise and SPX down this week. The declines will moderate from what we saw last week.
ReplyDeleteI anticipate that VIX will likely take out the 65 high from last year but will not go as far as the 85 high VIX from 2020 Covid.
ReplyDeleteSPX hit my 4,920 and seesawing but it'll continue lower. I'll post the SPX chart.
ReplyDeleteSPX heading to 4,150.
"Trump threatens new 50% tariffs on China if Beijing doesn’t remove retaliatory duties"
ReplyDeleteTrump is resetting the economy! So what we are seeing now is the return of deflation and recession.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteGold selloff next to meet margin calls soon? LFG SC...holding short thanks...
ReplyDeleteTomorrow tariffs take effect so expect a down day.
ReplyDeleteYesterday markets hit my 4,920 SPX target and a snap rally occurred. The bounce will last long enough to relieve oversold conditions. Markets hoping for a deal but that hope will turn into massive selling later in the month.
ReplyDeleteFully agree with you SC. Armstrong also nailed this latest correction to the very week. He mentioned more selling towards the end of April, than the market will come roaring back due to capital fleeing Europe. Due to trouble in the middle east and Ukraine and Russia. Gold also to take a hit before springing back with vengeance in the first week of May.
DeleteThank you and I appreciate this! Yes it should get worse. We'll see more selling. Also agree the Ukraine war is about to become more active. Putin has been waiting for the moment. Countries have cut back financial support for Ukraine and Russsia will take advantage. Good point!
DeleteWe have here a 300 point pop from my 4,920!
ReplyDeleteInteresting that Hong Kong had worst day since 1987 and China the worst since 2008...
ReplyDeleteTariffs become effective tomorrow. UVXY up again and rising much higher.
ReplyDeleteMy preference here is to chart SVXY rather than UVXY directly. I've been charting it for a while. UVXY I'll look at the numbers more but should at least double short term and much higher than that this year. The biggest volatility is still to come. It's early.
ReplyDeleteFresh high on UVXY
ReplyDeleteMarkets cooling off!
ReplyDeletehttps://youtu.be/fxDAyUiXphg?si=cuD5TqvhGces395C
This selloff isn't just about the tariffs. That was the trigger. Economic surprises are coming and they are going to be negative. There's recessionary forces and this is deflation we are seeing. The market knows this and is leading down. The economy is worse than everyone thought and the markets are heading lower.
ReplyDeleteChina tariffs 104% took effect at midnight. China slapped 84% tariffs on US goods. Huge tariffs have hit both sides ending or severely limiting trade between the two countries.
ReplyDelete"A panel of EU trade experts will vote on a set of retaliatory tariffs on the United States today."
ReplyDeleteVIX should be working up to last year's high around 65. We can see that maybe within a week.
ReplyDeleteBy Friday lol?
DeleteHahaha markets are volatile but I'll wait a while.
DeleteTLT looks like could drop to 65. Are China and other foreign creditors dumping Treasuries?
ReplyDeleteYes Rob that's what we need to watch. With 125% tariffs China will retaliate. When they sell it'll be a big shock.
DeleteTrump:
ReplyDeleteBe cool! This is a great time to buy!
Ok so Trump's looking to support the market here at the 20% down threshold. So ok I'll look to take profit soon probably this week. VIX is cooling a bit today. I'll wait for the next entry. It won't be long...
DeleteTook some profits as well. Later April should see another decline.
DeleteWe wait. VIX may pop a bit tomorrow i suspect but dust needs to settle for next big wave of volatility.
DeleteTrump raises China tariffs to 125% but announces 90-day pause for others!!!
ReplyDeleteStopped out UVXY $47.50.
ReplyDeleteWas good profit from entries at $29.40 and $19.20.
DeleteOnce Trump came out and said buy the market I wasn't going to fight that.
ReplyDeleteBut I also know the next wave of volatility will come. UVXY has a golden cross on daily. It's coming.
ReplyDeleteThe cross is coming; not quite there yet needs a little time.
Delete"Trump tariffs drop to 10% universal rate for all countries except China for 90 days"
ReplyDeleteIt was nice that Trump gave that tweet on Truth Social! A little heads up!
ReplyDeleteMy 4,920 level produced once again big rally! Look at this reaction.
ReplyDeleteDOW up 3,000!!!
DeleteSo to recap I took the first entry on UVXY $29 back in September before the Election. I knew the volatility would come. Then I said watch for volatility after Trump inauguration. I took the next entry UVXY $19 in January. That timing was optimal.
ReplyDeleteYou see I have a Cycle to watch for volatility that filters out the noise. The SPX is a noisy index. It constantly jitters and especially at the highs it oscillates and confuses traders.
Now I look at the filter and volatility should calm down for about 30 days. The next volatility I think will be the most spectacular of the entire move. So for volatility we wait.
Still holding some shorts in case market declines here in next couple weeks.
DeleteToday S&P losing much of yesterday's "historical" rally
DeleteThe volatility will calm a bit here. Relax!
ReplyDeleteThe Canadians are going to come to the rescue and help Trump. Through thick and thin always Canada is there for support. April 28th there is an Election in Canada and it could be a positive for the United States.
ReplyDeleteI'll wait until after that to reshort.
"On March 8, 2025, China’s commerce ministry announced it will apply a 100% tariff on Canadian canola oil, oil cakes and pea imports, and a 25% duty on Canadian aquatic products and pork."
DeleteYou see Americans and Canadians have something in common. Both have a problem with China. China recently put tariffs on Canada. Canada sees Trump making a stand against China and will support that. America and Canada are like two brothers who fight a little but still the best brothers.
DeleteWell, as a proud Canadian, the relationship has been damaged. Hoping the election has an outcome that strenghens our country's economy and diversifies trade so we are not so reliant on the US. What the US is doing, is hurting us a lot
DeleteNot sure if brotherhood or family does that. Unless you come from an abusive home
DeleteRelations hopefully will improve somewhat though tariffs seem likely to stay. The US is running a huge deficit and has fired the government and tariffs to raise money.
DeleteTrump will need Canada's support in the war against China.
DeleteXi says China "not afraid". China strikes back at U.S. and will raise tariffs on American goods from 84% to 125%
ReplyDeleteThere have been "topping tails" on the VIX futures dailies last week. This is also suggesting that volatility can cool off somewhat before the next spike.
ReplyDeleteUVXY is making it's golden cross on the daily.
ReplyDeleteAn important fact about the etfs is that they rebalance every day. So when the S&P 500 is swinging up 9% one day and down 6% the next day this costs the etf.
So this is very different from the Covid meltdown and so our volatility trading strategy is adjusted accordingly.
ReplyDeleteIt's a hit and run market.
The next volatility should be spectacular when it's ready. First VIX needs to consolidate.
SPX has death cross on daily!
ReplyDelete"Nvidia says it will record $5.5 billion charge"
ReplyDeleteMarket had a setback there. Nothing to worry about. I'm expecting a lot of gyrations but higher in May.
ReplyDeleteTrump is waiting for the markets to rebound to slap some more tariffs.
ReplyDeleteIs Trump going to fire Powell? He's not allowed to right lol?
DeleteActually it's likely Trump will fire the Fed. Not now but later. When the markets keep dropping the pressure will increase and Trump won't be willing to even wait until the end of Powell's term.
DeleteThe legalities lately have become less important than "emergencies".
For example "If we don't fire the Fed then the markets will crash"
The dilemma here is that China doesn't have an independent Fed.
ReplyDeleteSo the United States is competing against a country with a totally different system. This is why Trump says it's time to get rid of the Fed.
Markets rebounding. Notice that VIX has been relatively calm.
ReplyDeleteYou see! The VIX was right!
ReplyDeleteAny update?
DeleteEnd of May for the big volatility?
We'll bounce around some more weeks to alleviate the oversold conditions. SPX is in rally retracement for now and it loves to rally on Fridays.
DeleteThe next volatility will be more violent because the configuration of averages is negative with a death cross. A 500 to 600 point down day is probably coming when it's ready.
The firing of the government and tariffs have done little to reduce the deficit. The savings have been spent in other ways as there are a lot of structural changes occurring.
It's a transition year as I say. Reports are stating that the USA is due to run out of money May/June. Trump has 90 day pause on some tariffs.
So there is time and the markets is good now for short term trading. We'll get back into volatility when it's ready. And volatility will get more severe.
ReplyDeleteWhat is the target for SPX? Around 4600? or a little less
DeleteThis won't be a typical V bottom such as we saw in 2020.
DeleteSPX will go a lot lower than the April low. We do need to let this rally finish and it will likely take some months.
It's probably an ABC style rally then huge gap down from my model.
The Canadian Election results are in, and markets have rallied as anticipated!
ReplyDeleteAs suspected recessionary pressures are increasing. A recession is defined as GDP falling for 2 consecutive quarters. Now we have 1 quarter down.
ReplyDeleteI still say though that we won't see a serious recession yet. It's coming. Several years away and it will be ugly!
SC is there odds the low is in for the year?
ReplyDeleteThanks
There's another big drop coming. The market has staged a strong rally when Trump said to buy. Rally will fizzle with time. I think around the November anniversary of the Election is another bad spot and I have a model suggesting we may not hit bottom for another year. We do need to let the rally finish.
DeleteThe market's hope for trade deals is what buoys this rally. That hope will fade and lead to violent selling.
USA Canada meeting coming Tuesday! I knew the market would rally on Canada and it has.
ReplyDeleteHowever next the FED meeting coming this week likely to be a negative. You all know how Trump and Powell mix like oil and water!
We can see the market becoming restless as trade deals fail to materialize.
ReplyDeleteAs anticipated Trump talks with Canada have calmed!
ReplyDeleteTrump writes in a post that America seeks their friendship, which hopefully we will always maintain.
US and UK announce trade deal but they don't trade much. We can go a little higher but expect we'll have another spot to short this month.
ReplyDeleteWe're still trending up for the moment
ReplyDeleteTrying to test 200 dma
DeleteThere's not a lot of excitement out there
DeleteAgreed, market rallied on China news but will go quiet again soon. I'll short again soon once momentum fades a little. The next volatility will be even more explosive.
DeleteWhat we can expect is another round of volatility particularly this summer as tariffs extensions for most countries are due to expire at that time. July and August.
DeleteConditions will continue to deteriorate in the debt crisis. Moody's finally followed Standard & Poor's and Fitch downgrades in US debt.
ReplyDeleteThe problem is that continuous deficits have lead to government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.
ReplyDeleteIt's doubtful that tariffs will fix the problem. Ultimately I think economic growth would be needed to turn this around. There's no easy fix. It takes time.
Tesla December puts look attractive here after last week lol
ReplyDeleteInteresting idea, thanks! Yes Tesla has been having difficulty and that drama stunt between Trump and Musk doesn't help the situation.
DeleteThe market went quiet as anticipated. Volatility has cooled and I'll be looking to position again into volatility before long.
ReplyDeleteConditions are becoming increasingly unstable. Riots in LA will continue to build. G7 next week might see a hiccup. Market dip likely.
Friday the 13th. Nothing major but problems in the markets are surfacing.
ReplyDeleteOil of course spiking. Just waiting for the big entry once it stabilizes.
ReplyDeleteSC are you getting ready to pull the trigger on oil. Bought USO at 69.41 two weeks ago with this war cycle I follow. Wanting to buy some more, this peace agreement is only short term.
DeleteG7 was a negative as suspected. Market dropping this week!
ReplyDelete