Yo Pit Crazies!
Say what you will about the current administration, but things sure do change in a hurry.
And change brings uncertainty.
Consider the latest Epstein related happenings:
- Head Legal Council for Goldman resigns
- Prince Andrew arrested
- Bill Gates pulls out of a conference in India as the keynote
- Wasserman of CAA fame quits the most powerful talent agency in Hollywood
The files are making a splash and at the same time, military assets are moving into the Persian Gulf region at high speed. The common thread of all of this is no one knows how it will end.
And that uncertainty is fueling the VIX higher.
VIX is creeping up again
This is what VIX does when uncertainty builds:
VIX 3 Day Chart
That is a sign the market is waiting for something to happen. Trump is hinting at 10 days for a response from Iran I am not sure he is going to get.
As time builds, and nothing happens, the natural inclination is to pull back on stocks and wait till the dust settles. Think of a rubber band pulling back waiting to snap.
Lack of Liquidity Defines these markets
In the old days sitting on a trading floor, we could hear the time clocks tick when things slowed down. When news came about big Geopolitical Events, trading stopped.
I remember the quiet and no action during Gulf War I and II.
The time clocks kept ticking every day not hidden by the noise of the crowds. Liquidity dried up.
Volatility strangely enough is moving much less.
The action is in the Mag 7 and this is where I will be looking. The snap back will be huge once the Persian Gulf situation rights itself.
To Your Trading Success,
AG