Many of you have noticed the rising Implied Volatility this month. Notice, also, the nearer month's implied volatility is rising and is nearly as high as the 30-day implied volatility. This let's us know that there are mounting concerns. It's ok to pare down trading, take profits and hedge. The rising IV can lead to stronger pullbacks. Keep an eye on the FastK line on the Stochastic. If it falls below 75 we could experience a pullback, and nobody knows how strong it might be.
I'm not saying it's imminent, but when near-month volatility rises, we should be aware.
Craig.
3 comments:
Thanks Craig
Thank you, Craig.
I notice VIX is up, but May be " This time different". Because of Corporate tax cut from 35% to 21%, and repatriation, there are so much money out there. What these corporates will do with those money? If most of companies decide to use those cash to buy back their own shares, then will that make this markets going up, and up, and up... Until some really bad economic data, or some disastrous political event; or some natural disasters happened, seems the markets will just going up, and up.... my hedges killed me. I had so much fear that the markets will surly pull back.... by looking at that parabolic move for 3 weeks ..... I almost feel that I will take big hit take losses, and closed my hedges. Not so sure when this parabolic moves will stop?
Thanks,
Serene
I'm not sure when the move will stop either, Serene. I keep giving the market targets (inside the ranges), but all it's doing is hitting the targets and then blasting through. If you want to reduce the hedges and use stops instead you could. Or, if you draw a resistance line, you can exit any hedge you may have had if the market breaks up through the line.
Some of the trade strategies are a bit hard to work with, such as the short VXX calls (or shares) because people are getting nervous above the extraordinary rallying.
I imagine the market will continue to go sideways at times and higher if corporations continue to buyback shares - to your earlier point.
Craig
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