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Revisiting Truth's Moment
Way back on August 30, I did a post called Past Fear, Present Fear, which offered up an analog of the VIX (please read it if you don't remember; it's a pretty good post). I would daresay it was one of the best posts I did in 2014, and things certainly unfolded as I hoped they would (although today was no fun for me). I followed up on October 9th with my Moment of Truth post, which was just before the markets started really falling hard. Thus - so far, so good.
I've hacked together an update of the analog (although much more sloppily, and with different colors). Below we see, in yellow, the "throw-under" low, followed by the green burst, the cyan mega-burst, and - - what we're in right now - - the magenta decline. Historically, this was followed (in grey) by another push higher.
Below is the present VIX, which is panning out similarly, except in a sped-up fashion (e.g. fewer bars). The big question, of course, is how long we stay in "magenta mode" (where the markets get complacent again and grind slowly higher) before we return to another surge in the VIX. It goes without saying I'll be waiting for the grey rather impatiently.
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I don't really see the similarity. It's just a bunch of squiggly lines.
Absolutely frightening the way history rhymes. I like to buy UVXY on pull backs like we're seeing now. Sometimes, after a move up, I will wrtie short-dated (weekly) calls higher against the blooming IV.
So, you think volatility is going higher?
Fear goes hand in hand with the collapse of faith in the system.
Thanks, Tim, nice read.
history repeats itself!
Very good post!