Yo Pit Crazies,

What is a market condition? It’s just a factor that can change the price of an option. 

That includes time, stock direction, and volatility. I trade all three, and I can even decide how much of one of those I want to trade.

It’s odd to think of trading volatility, but it’s now an asset class available to most retail traders. I have written here that we’re coming out of a long VIX event since COVID hit and brought massive government actions. The talking heads are trying to figure out what the results of those actions will be.

20 day VIX with 1 min candles

I say just follow the vol.

Hoping for VIX in the Low 13s This Week

After over thirty years of trading, my #1 observation is that most bull markets get there on low realized vol.  Bull markets are confident markets. COVID simply derailed what was a long bull under Obama and Trump. Stuff got so cheap in 2008 folks couldn’t give it away. 

A lot of stocks look like that now because folks don’t want to take the plunge on recovery. However, stocks are moving higher in various areas – we’ve looked at Carnival Corp (Ticker: CCL) and Delta Airlines Corp (Ticker: DAL).

The point is, selective stocks are going up. I want to see that with a lower VIX, since that means some stocks are up and some are down. That is the sign of a healthier market – not the QE infused hyper rallies of the last year.

The second half of the year will be stocks outside of Tech. The Invesco QQQ Trust (Ticker: QQQ) will still do okay, but other stocks will start to perform. IV in names stocks is very low right now and that will get things moving in the right direction. Nitro Trader, Easy Button, and all the other single name stock services should shine in the second half of 2023.

If VIX spends time in the 12s, they will shine even harder.

To Your Trading Success,

AG