🚗Rates and QQQ in the Cage Match of H2 2023

[] [The daily rundown of everything happening at Option Pit.]( [.]( MARK-et Open Hey OP Crew, Vol Man here with my weekly analysis. Last week: “Note I said near impossible. The bank situation was a pleasant surprise and we cannot have a bull market without banks. For now I expect higher SPX and lower VIX by EOW with some action on Monday.” My prognostication from last week was mostly right. However, the action was on Thursday. This past week, earnings once again kept stocks going but not near the power trip of the week before. 4600 is proving tougher to make inroads above because the market wants to hear rates are going to stop going up. For now the Fed made that clear that is not the case. Note below that Thursday, the one day I tried to take off, stocks made an about face as yields in Treasuries climbed again. Stocks still recovered on earnings from names like Intel Inc (Ticker: INTC) and a small drop in rates. [ SPX daily price action over the last 30 days [ SPX sigma levels over the last 30 days. I like the Sigma look because it gives a good impression of 3 different terms of IV. Think of it as a “VIX” per term where the duration is the expiration date. It will show differently than VIX because that is 30 days forward and a rough combination of Aug and Sep in the above snap. However I sliced it, vol did not maintain the shock of Thursday and closed lower on the week. Volatile action in a bull market sets a floor on VIX. However 10, 20, and 30 day realized vol in SPX is now in the single digits. [ VIX cash closed .27 lower week to week and VIX futures dropped across the board. Having stocks sell off 1-2% intraday will push VIX quickly to 15-16, and then back off if there is no follow through in a low realized vol market. That’s exactly what happened Thursday. [ Closing VIX curve, Jul 21, 2023 [ Closing VIX curve, Jul 28, 2023 As hard as it is to believe, Aug cycle for VIX is two weeks away come Monday. To me the end of the summer trading season. Most of the extra VIX premium left the futures this week after the Fed rate report and most of the rest of earnings. Apple Inc (Ticker: AAPL) reports this week. [ VIX 30 day chart with 1 min candles Note that neither Vol Shock held for any length of time. If anything they were a good reason to close SPX puts or position short vol. I will note the last vol spike continued through the day which is usually bearish stocks the following day, but interest rates and Fed speakers did NOT keep up the momentum. Beside a potential news related shock, expect stocks to climb a bit more into AAPL earnings and VIX to hover around 13. I am not sure what takes us to Zone 1 (VIX 9-12), but it’s 3 years coming. And at 8% realized vol in the SPX, it will get there eventually. Option Pit and I have been generally bullish since the bailout in March, and I see no reason for that to end. Let’s Go! [/campaigns/org775804783/sitesapi/files/images/774695510/ag (2).png] Pit Report: Ken and Barbie Surprisingly in a Low Vol Relationship I didn’t see the Barbie movie, but some folks liked it enough to give it some pretty big Box Office opening numbers last weekend. That should be good for Mattel Inc (Ticker: MAT). Traders did take MAT up from the low 18s to the low 20’s on the back of that news. Earnings were a bit of a fizzle, and the stock is sitting a bit. [ 1 month MAT chart with 1 day candles Movies from toys and vice versa is nothing new, and MAT has a few toys they can bring to the big screen. That should be a growth business as long as they do the movies well. Let’s see if the movie biz is bringing any action to the volatility in MAT. [Click here for my volatility analysis.]( - AG Profits In Pumps: Another Reversal? WOW! AGAIN! I don’t know about you, but I was not expecting that big of a rally. A lot of times when there is a gap opening, meaning the opening price is much higher or lower than the previous day’s close, you can fade the gap because the stock may trade back to close that gap. That didn’t happen on Friday. Here is the entire day of SPDR S&P 500 (Ticker: SPY) in five minute candles: [ It traded right down to that low, that was created in the very first ten minutes of the day, and bounced. By not closing that gap, you know it is not going to trade lower. Therefore, I did not buy the SPY put vertical I recommended on Friday morning. When a stock does trade back to fill the gap, that is where you watch for a reversal. A lot of times a stock will close the gap and then continue back in the same direction from where it came. I honestly cannot say where we go from here, the chart is sending mixed signals. When that happens we need more evidence. Remember, no position is a position and sometimes the best one to be in. I do have an interesting chart in an individual stock. [You can see it when you click here.]( - Licia OPTION PIT GLOSSARY [( There are plenty of terms in the trading world that need defining. The [Option Pit Glossary]( is here to help. Today's phrase is: Ask price: The price of an option at which the liquidity provider is willing to sell. [( DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk. 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