One of the biggest mistakes I see traders make is getting bearish too early.
Although, at other times, it can amount to a larger pullback, but we need further evidence to confirm it’s not just a dip-buying opportunity. Typically, when we see the 10-day VIX and SPX correlation spike past 0.50, it’s a warning signal that we could be at least in a short-term topping process that consolidates or pulls back slightly. Then, the VIX retreated into the weekend, but we might not be out of the woods just yet.
Moreover, last week’s CBOE Market Volatility Index (VIX - 16.29) spike spooked many traders as it recently had found support near the 15 level and looked to be heading to test 2020 closing prices up near 22.54. Such a high rate of call buying relative to put buying has tipped off volatility spikes. Since last week, the rate has dropped off a bit. But as I mentioned last week, the one thing in the options market that I’m monitoring closely is the action of CBOE Market Volatility Index (VIX - 16.48) futures options buyers, who ahead of last week’s Fed meeting, were buying calls on VIX futures at a rate higher than usual.
Whether it is seasonality, or a continued unwinding of the pessimism that emerged in September – or a combination of both – from a technical perspective the bulls remain in full control.
Non-Traditional Exchanges & New Markets.Directors’ and Officers’ Questionnaires.