Yo Pit Crazies,
2022 is not going to plan and conditions are changing.
If you are interested in knowing what that means for your trading, consider joining Option Pit Pro and change how you trade the markets for the better, forever.
And if you want to see what is changing and why, keep reading …
Because some big issues are afoot:
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- The response to Omicron across the globe, and I don’t say this lightly, could still be very disruptive
- Rates are going up and the Fed does not have much maneuver room any more
- Markets are expecting big gains in GDP as things get back to normal, but those are not happening as planned
- Build Back Better is dead for now
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Those issues, big issues, cause waves in stocks.
Those waves we call volatility.
I can trade that volatility.
Let’s look at what is happening now …
Volman Does the Two-Step
The thing to note is the waves of activity brought about by the Virus Scourge.
What I tell my students about trading volatility conditions is not how high volatility or the VIX can go. It’s how low it can go.
The VIX two-year chart with realized volatility is blue on the bottom chart.
VIX and volatility lows are a sign of how sure folks are about the future.
Since Omicron was announced, VIX has not gotten back to the lows when everyone thought the vaccine would solve all our problems.
That’s disturbing to me.
Think about the radically different ways countries and states are dealing with the exact same issue … that’s an indication of the confusion that could spill into the markets.
Stocks should be doing well because, by all accounts, bigger companies have done well navigating the pandemic. An economic boom should follow the shutdowns. And while it has to a large extent …
Right now there is doubt again and that creeps into market volatility.
Feb is the next active cycle for VIX and I don’t think VIX will be making any new lows unless a positive surprise happens.
Buckle up for a bumpy ride.
To Your Trading Success,
AG