BY ANDREW GIOVINAZZI
August 7th, 2025
This morning, the Bank of England cut interest rates in response to weak employment data. U.S. stocks initially rebounded, nearly erasing Friday’s losses, but then reversed sharply. There’s little chance the U.S. will lower rates while Congress continues its aggressive spending.
Then Fed Governor Waller made some unwelcome remarks during a morning briefing—something Mark’s Advanced Notice would have flagged well in advance.
Yes, he used the I-word (inflation).
That was followed by a weak bond auction, and suddenly the VIX looked like it was gearing up for a return to Zone 3 this week.
The Scariest VIX moves are the ones that go up slowly
I’m usually indifferent to VIX movements—up or down doesn’t concern me much. But slow, steady buying in the VIX often signals trouble ahead for stocks. This morning, we hit the weekly lows on the VIX, only to bounce sharply higher.
The strong VIX rally lost momentum around 3 PM, finishing the day roughly unchanged. The thing with the VIX is this: if the market doesn’t cooperate—meaning it doesn’t sell off—VIX struggles to gain traction, especially in a low realized volatility environment. It needs follow-through to satisfy all the option buyers. Without that, they bail.
Today felt like one of those “smoke but no fire” kind of days—and that’s how I’m positioning going forward. I used the spike as an opportunity to add a leveraged VIX trade in Pro, and I’ll continue leaning short VIX unless we get a decisive move into Zone 3.
To Your Trading Success,
AG
