I find this chart to be quite remarkable and interesting. I love using chats to reflect back on history and time to see what happened, where we were and now how far we come. This chart is a perfect example of that.
What I have here is a chart of the VIX or the Volatility Index. I have it set to a weekly chart and what I am doing is just mapping out a few key levels and prior prices of the index. Each candle shows a week of VIX movements.
The first thing I want to point out is where the index was BEFORE Covid-19. For almost all of 2019, it sort of danced anywhere from 12 to 20. You could volatility was low. The bull market continued onward.
Then, Covid happened. You can see the spike very easily on the chart. And wow did the VIX pop. I personally have never seen anything like it, even slightly crazier than the Financial Crisis. It happened so fast.
One key difference I will never forget is that during the spike in the VIX it kept going up, and up, and up with very little pause. But the same was true on the way down, too. The Financial Crisis, however, was different in that it was prolonged, with second and third spikes happening over the course of a year, maybe more.
Today, as I write this, the VIX has almost entirely retraced its COVID-19 move. That is quite remarkable. Just to sit back and think about all the trades, headlines, and events that happened in this short amount of time. The VIX is now down 81% since its highs.
Now in this post I should also be very clear: I have no idea if this cycle is over or not. No one really knows. Perhaps there will be another spike. I don't really believe in doing TA on a chart of the VIX, but I do think it's worth noting that the Covid-19 gap has officially been filled. I've circled that gap on the chart.
One final note is the ability of human creativity and ingenuity. A vaccine was developed in record time, information and news spread around the globe, and while the Spanish Flu of 1920s last much longer, that's only because they did not have the technology we have today.
Anyways, that's the post. I did not cover all of my lessons, but I will add them soon.
Great post. I don't see us back in the 10 - 12 range anytime soon. The majors appear to be rolling over and risk protection is being heavily accumulated by large traders since Feb. I think we're going back to 46 before we lose long term trendline support currently sitting around 15...
ChartProphet
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Great observation!
jojofang0901
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potential bottom now, could be some turning point and bullish reversal in the near future.
Maximilianned
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Yeah I remember - shorted the VIX at 65 thought the water was safe at that point, I was wrong.
I did ok on some risk defined vxx spreads though - as I waiting forever it seemed for the VIX to fall back under 45.