The VIX closed at 19.74 on Wednesday, which was the first time
we've seen the VIX below 20 on a close since April 4th, and only
the 7th time since the initial selling episode in the first half of
January. Yesterday, the VIX jumped right back up above 20, but
today we're looking to close even lower than we did on Wednesday.
In a nutshell, fear continues to evaporate and that is really bad
news for the bears.
In all of my research, I've found that the truly important VIX
level is 16-17. Once the VIX hit this level - even in the worst
secular bear markets - we never ventured back to new lows. In other
words, if the VIX moves down to 16 and we subsequently see the
S&P 500 move to a low beneath the June low, it would mark the
very first time in history (at least since 1950) that the VIX had
dropped to 16, and then a bear market continued.
Keep that number in mind.
August Max Pain
We'll be doing a lot of calculations this weekend and trust me -
you are going to want to see them. There will be an inordinate
amount of net in-the-money call premium at today's close.....and
with just one week to go before August monthly options expiration.
I did a calculation on the SPY (ETF that tracks the S&P 500).
Here's a chart of the SPY with the max pain level featured with a
horizontal line just below 400
Currently, there is $1.9 BILLION in net in-the-money call
premium and this is JUST ON THE SPY. Imagine the QQQ and all the
growth-oriented NASDAQ stocks. Any bad news at all and we could see
a significant selloff next week. I'm not banking on it, but we MUST
be aware of it. This is no time to be a hero and be all in with
something like the QLD.
We'll have LOTS of max pain work done over the weekend and we'll
share our work with you. Be very careful into next week.
Posted by DigiNomad on 12th of Aug 2022 at 04:31 pm
Max Pain - "I did a calculation on the SPY (ETF that tracks the
S&P 500). Here's a chart of the SPY with the max pain level
featured with a horizontal line just below 400".
That would feature the SPY testing the 61.8% retrace...next
week. Would be gut wrenching, but as long as it stops at the 61.8
I'll make 100% profits for what I have on the board (not looking
for 100% profits, but...)
My theory for probably 3 weeks now has been that the 50%
retrace wouldn't stop the rally...because too many people were
talking about it. On the flip side, I haven't heard anyone (but me)
chirping about the 61.8.
My original bounce target posted was a move to the 50 then 200
day (which encompasses the open GAP at (4271-4300). I
simply posted a fib extension that equated to 4230 while most were
bewildered. My gut is that they will be once again but as I
always state - don't worry about prognostications instead trade
YOUR PLAN in conjunction with the evidence from the market.
I have stated many times we need to unload the bus and it's a
process.
DigiNomad - Tom Bowley always states that the "Max Pain" level
is the theoretical balance between in the money puts and calls;
and, he never really expects that number to be hit. It is
mainly provided to give market direction for OpEx.
Posted by DigiNomad on 12th of Aug 2022 at 05:00 pm
Ray - yep, got it. I when to B school, CFP, etc, etc. but I
don't mind someone else calculating Max Pain for me. I appreciate
you copying the post. Thanks.
Volatility Index ($VIX) Below 20 The
Posted by arun on 12th of Aug 2022 at 04:20 pm
Volatility Index ($VIX) Below 20
The VIX closed at 19.74 on Wednesday, which was the first time we've seen the VIX below 20 on a close since April 4th, and only the 7th time since the initial selling episode in the first half of January. Yesterday, the VIX jumped right back up above 20, but today we're looking to close even lower than we did on Wednesday. In a nutshell, fear continues to evaporate and that is really bad news for the bears.
In all of my research, I've found that the truly important VIX level is 16-17. Once the VIX hit this level - even in the worst secular bear markets - we never ventured back to new lows. In other words, if the VIX moves down to 16 and we subsequently see the S&P 500 move to a low beneath the June low, it would mark the very first time in history (at least since 1950) that the VIX had dropped to 16, and then a bear market continued.
Keep that number in mind.
August Max Pain
We'll be doing a lot of calculations this weekend and trust me - you are going to want to see them. There will be an inordinate amount of net in-the-money call premium at today's close.....and with just one week to go before August monthly options expiration. I did a calculation on the SPY (ETF that tracks the S&P 500). Here's a chart of the SPY with the max pain level featured with a horizontal line just below 400
Currently, there is $1.9 BILLION in net in-the-money call premium and this is JUST ON THE SPY. Imagine the QQQ and all the growth-oriented NASDAQ stocks. Any bad news at all and we could see a significant selloff next week. I'm not banking on it, but we MUST be aware of it. This is no time to be a hero and be all in with something like the QLD.
We'll have LOTS of max pain work done over the weekend and we'll share our work with you. Be very careful into next week.
- Tom Bowley
Max Pain - "I did
Posted by DigiNomad on 12th of Aug 2022 at 04:31 pm
Max Pain - "I did a calculation on the SPY (ETF that tracks the S&P 500). Here's a chart of the SPY with the max pain level featured with a horizontal line just below 400".
That would feature the SPY testing the 61.8% retrace...next week. Would be gut wrenching, but as long as it stops at the 61.8 I'll make 100% profits for what I have on the board (not looking for 100% profits, but...)
My theory for probably 3 weeks now has been that the 50% retrace wouldn't stop the rally...because too many people were talking about it. On the flip side, I haven't heard anyone (but me) chirping about the 61.8.
Thanks Digi My original bounce target
Posted by steve on 12th of Aug 2022 at 05:50 pm
Thanks Digi
My original bounce target posted was a move to the 50 then 200 day (which encompasses the open GAP at (4271-4300). I simply posted a fib extension that equated to 4230 while most were bewildered. My gut is that they will be once again but as I always state - don't worry about prognostications instead trade YOUR PLAN in conjunction with the evidence from the market. I have stated many times we need to unload the bus and it's a process.
DigiNomad - Tom Bowley always
Posted by Ray on 12th of Aug 2022 at 04:51 pm
DigiNomad - Tom Bowley always states that the "Max Pain" level is the theoretical balance between in the money puts and calls; and, he never really expects that number to be hit. It is mainly provided to give market direction for OpEx.
Ray - yep, got it.
Posted by DigiNomad on 12th of Aug 2022 at 05:00 pm
Ray - yep, got it. I when to B school, CFP, etc, etc. but I don't mind someone else calculating Max Pain for me. I appreciate you copying the post. Thanks.
I am planning to buy
Posted by arun on 12th of Aug 2022 at 04:33 pm
I am planning to buy QQQ 310P for Aug 26