🚗CPI’s Okay, PPI’s Not – VIX Still Middling

[] [The daily rundown of everything happening at Option Pit.]( [.]( MARK-et Open Hey OP Crew, Vol Man here with my weekly analysis. As usual, I’ll start with last week’s forecast: Last week: “Close to close realized vol still remains low and that eventually pulls VIX lower. That means most dips are getting bought, save Friday’s. I expect VIX to make a new short term high based on the flatter curve this week, and if patterns continue, SPX gets bought and moves back to 4500. From a vol point of view, there is less reason for go go AI bullishness in the short term, so after some fire this week I expect VIX to return its march down to lower VIX numbers but that is over a week away at least.” VIX made a short term high only to close near the week lows, SPX got bought to 4500 only to retreat, and Nvidia Corp (Ticker: NVDA) got face punched to get close to $400 again. Not a bad guess by me! What we really got this week was no new shocks. The “hand grenade” effect of the Fitch downgrade is still in the market; the shrapnel is still being felt. SPX was like a 1% trading zone all week which was most of the daily intra day move. Mark and I had several great [Trading Desk]( ideas because of this – basic illiquidity with no direction. SPX finished near lows, but not dead lows, of the week. [ SPX daily price action over the last 30 days [ SPX sigma levels over the last 30 days. Sigmas did not close on the low but did get close to lower levels on the big Thursday CPI rally. We are still in Zone 2 for sure although the Aug vols dipped into Zone 1. The bid for options evaporated into the close. Volatile action in a bull market sets a floor on VIX. A lot of the Jun and Jul rally was a FOMO pop with AI and the Invesco QQQ Trust (Ticker: QQQ) going full tilt. With NVDA down 10% this week some AI air is out of the balloon so the hard upside should be dead for a while. Note that 10 day realized vol is only 11.35% up from last week but still pretty low: [ VIX cash closed near 2+ points lower so most of the Fitch downgrade has been erased in Vol Terms. The big question is if VIX can get to the lows of a few weeks ago into the 13 handle. [ Closing VIX curve, Aug 04 2023 [ Closing VIX curve, Aug 11, 2023 The Aug cycle VIX vol has a shot at coming in on the lows. With three days left, I did roll some VIX Aug16 15 put positions to Sep but not all. [ VIX 30 day chart with 1 min candles VIX closed near lows of the week as the selloff never materialized. The market was weak with the QQQ drop so that is something to consider as $20 came out of the QQQ. The rotation out of QQQ should be relatively VIX flat, since some stocks are sold and others bought in the SPX I can see a just sub 14 low next week but SPX finishing on the lows of the week is not bullish. I think we are more likely to see a sliding SPX and VIX as the market unwinds some of the AI rally in the early summer. Let’s Go! [/campaigns/org775804783/sitesapi/files/images/774695510/ag (2).png] Profits In Pumps: College Football on Its Way! How is everyone doing on this fine Sunday? For us, it is the last weekend before my son heads back to college. It’s his second year, so it won’t be as crazy gathering all the things he needs for his room. This year he will be living at the fraternity house. I know, I can’t not think of Animal House everytime I hear that term. The good thing is the house is on campus so no parties are held there. Phew. Not that he won’t be going to parties at the other houses but … that’s college, right? I am looking forward to the college football season starting. As you may remember, we have become HUGE Horned Frogs fans. We have a new player this year named Brione “Big Bubba” Ramsy-Brooks from Dallas. He is a freshman who is 6’5” and weighs in at 455 pounds. [ Remember The Fridge? Those were great football days. We really enjoyed watching the Frogs last year with the whole family getting involved texting one another during the games including both Grandmas, Grandpa, aunts and uncles. I think this year will be even better. Just watch one of the games and I bet you too will become a Horned Frog fan. Getting back to trading … [Click here for today’s chart analysis and trade idea.]( - 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: Futures: A financial instrument that prices a commodity or index further out in time. Futures delivery can be in the physical commodity or cash. [( 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. 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