Death Doom And Destruction

a couple of weeks ago

None of the above are actually happening, but I sent out a feel good newsletter with a hopeful premise for the future yesterday and a bunch of folks were actually wondering if my account had been hacked. ‘Who are you and what have you done with the Mole?!!’  So I just wanted to assure you that I’m alive and well and not chained up in some rat infested dungeon. Guess I won’t be making that mistake again! Anyway, now back to our regularly scheduled programming:

Honestly I can’t think of anything overly insightful to share about the current market as we seem to be treading water. The tape for sure ‘feels’ bearish but there’s always that JIT stick-save that draws us away from any hurdle that may impose excessive gamma risk.

On a more long term basis the one thing that stands out is the fact that the IV Z-Score continues to drop and no matter what happens in the bonds, in big tech, the Dollar, or anywhere else financials continue to hold this market.

Speaking of big tech – yup it’s looking pretty droopy and the mini bear is in sight at least until the NDX manages to breach back above the 13,400 mark. However that said – nothing truly bearish happens until 12,200 is being taken out.

The VIX also seems to have petered out near the 20 mark now. I have to say that this is a positive sign and obviously there are now two avenues in front of us:

  • We hold here for now and we option traders take advantage of the biggest IV buying opportunity of the year.
  • We drop below the 20 mark and stay there for the foreseeable future. Which would mean we just completed a small sideways correction and it’s even higher equities moving forward.

I guess whatever was done to alleviate the impending crisis in the interest rate swap market has been addressed as the long wick extending to 91.37 looks like an exhaustion spike to me.

Now let’s look at what’s happening in the bonds, currencies, and even on the crypto side:

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  • Mike
  • a couple of weeks ago

About the Author

Hey there, I am one of the founding members of Red Pill Quants. I used to work as a systems engineer in Silicon Valley until I left the industry in 2008 to become a full time quant trader. It's been fun ever since.

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Written by Mike at Red Pill Quants
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