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Thursday, February 16, 2023

Market Update 2/16/23 - This Is Looking Pretty Bearish - Looking At The $VIX

 As I've said before, the longer the market takes to form a top, the worse the correction is going to be, and we're already 5 months into this rally. Seems, more than just, "a little", long in the tooth 

But I finally think we could see a healthy correction, shortly, based on what I'm seeing on the $VIX, and even the French $CAC - nearly testing the all time highs, this morning!  

 The $VIX has continued to sell off, since I called the market bottom, back in Oct., but at what point is the $VIX getting oversold, and market participants being overly complacent. Right here, I think!  

The whole point of the $VIX is to offer an easy way to buy protection, but over the past few years we've seen the $VIX shorted, as a way to keep volatility down. I can't tell you exactly how that works, but I can see it in the charts. 

Many Pro Traders are questioning the $VIX at these levels, and the amount of selling we're seeing on the $VIX, on a daily basis, as well as the daily snap-back rallies in the already overbought equities market. One theory is that daily Options trading is to blame? I don't know if that's true, but we've seen the $VIX shorts get burned before.

2018 $SVXY (VIX Bear) $VIX short sellers slaughtered 


$VIX - once again it's hammered out of the gate! 

Yesterday afternoon, I alerted to what looks like a bottoming (triangle) pattern on the st $VIX 

$VIX - trades into a bullish setup on the DCS chart 

I was thinking we could see a Black Monday, and we could... overseas, but Monday is a trading holiday in the US. 

Of course, we could see a Black Friday OPEX tomorrow, and since the market bulls haven't paid their protection money - in the form of Put Options - that would fit, but bloody OPEX dates are very rare. 

99% of the time, you see the market hold up on Options expiration, just as we did, before the so called "Covid Crash". 

Take Care, AA   

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