It is fall, and my tree-felling adventures are exposing some nice maple trees in “high season.” 

Spooky Halloween is coming.

Now normally I would say, ” I don’t know about you, but Zone 4 has me spooked,” and it certainly has the market spooked. The problem is the S&P 500 isn’t even down 1% on the day. So what has the market so spooked?

Right now, I’m going to say it’s the small-cap banks. Why are they tanking? Is it something that has to do with the government shutdown? Is it something to do with their bond portfolios? All of a sudden, with interest rates dropping, treasury bonds are making one-year highs, so their long-term bond portfolios should be doing okay. This makes no sense whatsoever.

Basically, we have three issues going on:

• We have VIX going to the moon
• We have the S&P 500 dropping less than 1%
• We have the small banks cratering, and there’s no news

Normally, what I would say is: when you don’t understand what’s going on, follow the VIX. Right now, the VIX is in Zone 4—that is, in the highest quartile of volatility—and the market is waiting for a giant shoe to drop.

One way around all this volatility is to look for longer-term time horizons.

That’s what I’m setting up to do in Flash 7. 

I’m going to launch my first trade on Friday at 1:00, so join us. 

If the short-term volatility has got you worried, looking at option fingerprints and flow from longer timeframes takes a lot of the worry out of that trade and investment.

To Your Trading Success,

AG