So stocks liked the CPI number, Did VIX Too?

Andrew Giovinazzi

BY ANDREW GIOVINAZZI

November 15, 2023

Yo Pit Crazies,

Now we don’t have the Oracle of Alberta but we do have Frank Gregory as our own arbiter of government shenanigans and how we are supposed to take advantage of it. (Check out his webinar here)

I saw this today on Twitter, I won’t call it X, in multiple places and from what I read this is a big part of why the CPI was only 3.2%.

I won’t bother with how the current administration framed this but “Inflation is down 63%” or something like that is not really correct.

Prices are higher everywhere. Just not as fast thankfully.

Oil and gas was lower so that was a big help.

As we know, those prices fluctuate and I see food bills and the price of a Big Mac and I am not seeing too much difference there.

If anything higher by 10% over last year. None of that matters if the market thinks the Fed does not have to raise rates.

The chart below is of the Russell 2000 trust ETF (Ticker: IWM). It was up 5% yesterday. Yes 5.49% in a day. That is a 1 day 90% volatility.

3 day chart for the IWM with 1 min candles

VIX liked the number

While Frank will talk about the government and the massive dislocations of power and money they move around, VIX is the arbiter of what the market sees. And what I saw on the close is a relatively low VIX and a normal volatility curve.

That is the IV moving higher on the downside than the upside.

Index skew moves OTM put to ATM, ATM and ATM to OTM call. By the close on Monday the downside was flexing most.

If the CPI comes in hot, expect a down opening, maybe 1% or more but if inline, just a slow grind higher but 4500 is easily in the cards by Thanksgiving.

I set up a trade in OP Mentoring (Call us for info on mentoring 1-888-872-3301) that was theta positive but long “smile” from 4350 and higher.

If all this does not make sense, join me in class or reread a few times. It works for me.

To Your Trading Success,