Yo Pit Crazies,

Reddit and Amazon crushed earnings today. Made new highs. Joined the rest of the MAG7 party. Then sold off hard by close.

While everyone’s celebrating the beats, I’m watching something that matters more: liquidity is disappearing faster than Halloween candy.

Here’s what I mean by liquidity: it’s volume at a price. You want 100 shares? Easy. You want 100,000 shares? Good luck. And right now, that “good luck” part is getting worse by the day.

The Holiday Liquidity Squeeze Nobody’s Talking About

Two things happen as we roll into year-end that create these violent pocket moves:

First, trading desks get conservative. They’re not risking their bonuses on some hero trade in November. Risk-off mode activated.

Second, market makers pull back. They’re less willing to provide that volume at price, which makes option volatility move faster and sharper.

What you get are these dead zones where nothing happens, then BAM; when volume finally hits, it moves like a freight train because the other side just isn’t there.

That RDDT and AMZN action today?

Perfect example. Earnings euphoria meets liquidity reality. Hence the late-day selloff despite the beats.

The VIX Is Telling You Something Important

VIX hit 17.44 Friday: AFTER earnings, AFTER the Fed, AFTER all the supposed clarity events. 

Still rising.

Here’s the disconnect everyone’s missing: we have a market event with no expiration date. This government shutdown situation just sits there, creating this persistent volatility premium that won’t die.

I track the VIX cycle over 30-day periods; that’s the life of the current VIX future from expiration to expiration. We haven’t made a new monthly low in this cycle. At all.

Why? Traders keep buying protection because there’s no end date to the political uncertainty. Normal volume decay patterns are broken when you’ve got this open-ended event risk.

What This Actually Means for Your Trading

Stocks can still rally, don’t get me wrong.

But expect the rally to slow because of this liquidity function. However, when moves DO happen, they’ll be sharp and violent.

That’s the market condition we’re in. It’s not changing tomorrow, but it could change over the weekend if we get a shutdown resolution.

If that happens, I’ll be aggressively selling volatility. But right now? I have zero interest in November VIX contracts. I’m looking at December.

The seasonality combined with this political premium creates a specific setup: muted moves most days, then violent spikes when volume meets no liquidity.

Trade accordingly.

To Your Trading Success,

AG

P.S. I was Batman in my classes today, or more like Bruce Wayne, but who’s counting? Markets might be tricky, but at least Halloween’s still fun.