Yo Pit Crazies,
AG's alter-ego Vol Man here with my weekly analysis.
As usual, I start with my last forecast…
Last Week’s Big Call
For the first time in a while, I think next week is going to be ugly for SPY. Something is happening and a firm is blowing out is my best guess. I think we see sub-750 SPY and VIX to Zone 4.
The AI story is still running but as in all good things, it might come to an end for some firms.
The big selloff did not materialize and we did not get to Zone 4 or below 760. We did get a late week bout of volatility after challenging all time highs early in the week but ultimately stocks did not want to sell off even with VIX near 20.
XOM 1 Year Chart
A stat that might surprise you is that Exxonmobil Corp (XOM) is doing way better than Nvidia Corp (NVDA) over the last year. I find that an odd metaphor for the AI race is that ultimately the data centers need to be built and they will need natural gas or some other fossil fuel to run on. Oil stocks were great for me this year and I owe it all to Frank Gregory in 2021. The Green/AI revolution will need power. He was and is right.
The Weekly Wrap Up
Right now Iran is trying to cause havoc in the Persian Gulf just randomly shooting missiles at ships. I do not think that will go well for them come Nov 4th. I see Pres Trump making a quick end to the conflict however that goes.
At this point the AI revolution is stalling. Investors cannot figure out what to do so they are buying oil stocks and likely every beaten down stock in the S&P 500 going into the end of the year. The Cap Ex part of the AI build is making itself heard and investors are pulling their chips back. Still, the SPY only managed down <1% for the week on awful sentiment. Traders are not selling.
Mini Rant
My Twitter stream is filled with fraud just about everywhere conveniently while Congress is out for vacation. We could save $1 Trillion per year if the USGov would do its job. Rates would be back to 4% in a jiffy.
(Every Friday, The Options Insider Radio Network’s Vol Views offers bonus volatility insights with either Mark or myself, no charge!)
SPY daily price action over the last 30 days with one-day candles. SPY Sigma (volatility per term) for Oct, Nov and Dec
SPY made a hot run again only to get taken down by Tech disappointment. The crowd loved SpaceX (SPCX) early in the week and sold Meta Inc (META) at the end of the week. When oil stocks lead, SPY goes nowhere.
SPY Realized Volatility snap on Oct 25, 2026
Here's what realized volatility means: it measures how much a stock actually moved over a specific time period. Think of it like checking your car's odometer after a road trip. The odometer tells you how far you actually traveled, not how far you planned to go.
High realized volatility means big price swings. When SPY has high realized volatility, the market is unstable and prone to sharp drops. When HV10 (realized volatility over the last 10 trading days) is under 10, stocks aren't going anywhere.
Realized volatility jumped a bit on the last 10 days of action but only to 11.43. VIX futures are in the 18’s with VIX around 20. That is very high volatility for very little action
VIX Volatility Curves
Closing VIX cash and curve Oct 16
Closing Curve Oct 23
The VIX curve is not as flat as last week with VIX just lower. Most of the action is on the very short end of the curve around the election and FOMC. We have a busy 10 trading days in front of us according to VIX.
(Check out Volatility 101 basics on our Option Pit YouTube channel, now streaming.)
OP VIX Zone Watch
VIX ZONE 1 9-13
VIX ZONE 2 13.01-17.99 We visited here
VIX ZONE 3 18-23.99 We closed here
VIX ZONE 4 24+
VIX leapt hard to Zone 3 at the end of the week when most of the earnings news was positive early and VIX wanted to drop under 16.. Then the AI financing story killed all the tech momentum.
VIX 30-day chart with one-minute candles
We spent the early part of the week shrugging off last Friday’s move only to get it back on this Friday. VIX is too high for what is actually happening.
The Big Call
More earnings, the FOMC minutes, the Election, the Anthropic IPO all coming in the next two weeks. VIX is pricing crazy moves, 15 points or more for SPY for next week. I think we will get them. The FOMC should pull VIX lower afterward but the news around the election will kick it right up again. The headlines will keep stocks in and up and down orbit all week. $770 could happen easily for SPY on the whisper of positive news. The market rallied easily to 774 SPY and could not sell off at the end of the week even with VIX running hot. That is still bullish in my view.
I don't see VIX dropping below 17 until after the election.
Tap this link to see how you can trade it next week.
To Your Trading Success,
Andrew