Top 5 Weekly Trade Ideas #4 - VX Breakout

17 בדצמ׳ 2024

Looks like the market is preparing for some volatility heading into FOMC, which is not something not we've been seeing as of late. We could be due for a sharp correction if this continues, but of course it could also just be some hedging and might not amount to anything.

Pretty good looking chart, nice bounce off the low at 15.80, but for now it is still in the range from 15.80 - 16.80. Given the inverse H&S + channel break and bounce at 15.80 I'd expect more upside in the short term, but it has to clear 16.80 first. If it does and keeps going, look out below on ES.

18 בדצמ׳ 2024

עסקה סגורה: היעד הושג

What a move, this was a pretty high confidence setup for me. I got out of most short term UVXY calls after it hit the highs from November, but I wouldn't bet against it right now. Maybe it can come back down towards 18-17, that's what I would look for if it fails. Otherwise, looking strong if can break above today's high and continue.

This is the third setup in a row since the election where VX was showing obvious signs of what was to come leading into volatile events. In the two days before the election, we saw VX falling off a cliff as stocks remained flat to red. Nobody was hedging or expecting any downside and therefore there was none. Same thing for CPI. This time, we saw both VX and VIX rocketing the two days before FOMC despite the Nasdaq hitting new all time highs. A clear sign of what was coming.

There were some other signs of weakness with NVDA losing all of its steam, breadth plummeting and a rate cut that was already priced in after CPI. Lots of good lessons on reading VX recently, it works much better when it is not just completely dead making new all time lows every week. Will be important to watch, would not be buying dips when this thing is strong like this.