The Option Pit VIX Traffic Light Is Red: Volatility is likely to slide.
Hey Traders,
Friday trading is going to be interesting.
The debt ceiling will likely be behind us, and non-farms will be out.
The VIX does seem to think the former is a sure thing and seems to be ignoring the latter.
VIX closed at 15.78 on Tuesday, tying for the lowest close in the last year. I expect the VIX carnage to potentially continue.
While we will see the SPX move in Fits and starts and we could be heading toward a near term fit, the trend for June is going to be a declining VIX into quadruple witching.
SPX may meander higher over the month, but I expect that the bulk of vol dying is more a lack of movement and a lack of selling.
Yes, tech is overbought, but there are so many sectors related to industrials that are in the toilet. We could see QQQ fall and SPX flat or up.
With that I expect the DJX (the Dow Jones) to outperform the other major indexes. So far this year it has been THE dog.
Check out the performances of the broadcap indexes over the last 6 months, it’s eye popping!
What this chart means is that we could see the Dow and SPX probably move higher and the QQQ move back down to earth.
When this happens, that means volatility dies. That’s what I am expecting this month.
The VIX is probably going to break 15 and 14, maybe even get into the 12s heading into the 4th of July if there is enough pressure on volatility.
Questions about that? Leave a comment below!
Your Only Option,
Mark Sebastian