BY ANDREW GIOVINAZZI
August 9, 2024
Yo Pit Crazies,
After reading this letter, you will want to check out Mark explaining VXX HERE.
Yes I am up at 530 am every morning reviewing the day that just happened. Mark your calendar when I take time off or go to Chicago for stocks to actually do something. It is like clockwork.
I take off on Monday and VIX gets close to a record 1 day move. I have family vacationing here at my house and VIX stays above 24 all week long. The 1st time in 2024 just happens to be the random week in August I choose to be out. Oh my.
One reason why the VIX curve fascinates me is because if I had VIX when I was a floor trader things would have been …. Easier. It is the best place for market information that I have seen and I have been doing this now for 35 years.
VIX curve Friday morning, Aug 09, 2024
Right now the VIX curve is telling me 3 things that you want to know
VIX is still backward
The 3 things to understand are Curve Shape, VIX direction, VIX Zone.
The VIX curve shape is still backward. To me this has VIX cash above all the futures so expect moves to be deep, 1.5% or more per day and in either direction. The kink in the curve is the election so if VIX cares about the election, the market does too.
The VIX direction right now is down. I look at the last Zone VIX was in and calculate from there. We were in Zone 4, now in Zone 3. VIX is down and has not been able to hold highs.
The relative Zone we are in as in 1, 2, 3, 4. 8-12.99 Zone 1, 13-17.99 Zone 2, 18-23.99 Zone 3 and above 24 Zone 4. We are now in Zone 3. VIX has a tendency to complete the direction move in a zone.
So my next target is the bottom of Zone 3 but I need the VIX curve to flatten quickly to ‘confirm”.
From observation, what happened this week is still in the VIX curve. It is a very nervous curve meaning we need time to get VIX to start to get to lower numbers which means stocks have to start having smaller daily ranges. The ranges are shrinking but they are still very high.
The Carry Bomb shock is wearing off quickly and economic data will matter more. That was more of a Zone 2 VIX which means sub 18 VIX.
That is my Sep expiration target. Get Ready Here,
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
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