Cracking the VIX Code

THE WEEK

The sweet up trend continues on.  After 3 ½ years of Market drama, this look is very welcome by weary traders.  You still have to be on your toes as every other day the Market is reaching new highs.  Any bad news could make it tip over.

The VIX, which measures the moods and emotions of the trading herd, is also in a sweet territory.  Here is my one cautionary note.  The VIX is a reverse indicator meaning that when it is high, traders are experiencing fear and trading discomfort.  Notice the VIX is channeling slightly up on the bottom support while the resistance area is generally topping at $15 area.  This tells me that traders are pretty happy but there is a little more uncertainty about the future starting to creep in to everyone’s thinking.  Again, one more reason to be on your toes for a reversal heading down.

LOOKING AHEAD

We have a couple of economic announcements this week – the CPI on Tuesday and the PMI on Thursday.  Both announcements are at 7:30am Eastern.  There is usually a strong reaction by traders to both of these announcements.  I do not believe it will be as strong this time or have a lasting effect on the Price/Action/

HOW AM I DOING?

It was another decent trading week.  My biggest bright spot is I was finally able to exit a stock, SQ, with a nice profit.  It was which was PUT to me in mid-December.  That felt good as it was hogging a lot of my Margin room.

Thursday’s DEEP DIVE Webinar

I see a lot of stocks moving rapidly between support and resistance areas

We are going to explore how to trade these Tickers as they swing up and down