Yesterday was the day to wait for – an episodic non-trending move in the VIX!
Write that down. It means that the VIX trend did not break out and hold above the 27 level (it actually went to 26 and then closed at 23).
So, what did you do at 11 AM yesterday? We saw a massive market move, and not just in stocks or short-squeezed stocks, it was in everything.
It was in rates, the Dollar (which hit its daily high), the S&P 500 (which went to 3805). What did you do at that time? It matters.
If you’re a passive investor and you don’t risk manage at all, well I guess it didn’t matter. But for us, it absolutely did.
You also have Implied Vol this morning. A super tasty, almost voluptuous, +64% IVOL premium on SPY.
Again, that’s what’s perpetuating the upside to all-time highs. People continue to hedge low, and chase high. We want to buy low, and sell high, using the VIX as the backboard to do that.
This is the Chop.