Stocks Turn Lower as Volatility Spikes: Is a Local Top In Now?

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Shares completed the day decrease, which hasn’t occurred a lot not too long ago, in a sudden flip mid-day.

There was no good rationalization for the sudden flip, however I believe in case you have been studying me for any size of time, then you understand that yesterday was choices expiration, and there have been a really great amount of adverse flows suppressing the VIX the previous few days/weeks, and now these are gone.

With flows of December opex and now Vixperation behind, choices flows which have supported the market are formally gone. I’ve little doubt in thoughts that these flows have pushed this ultimate leg of the market increased for the reason that Fed assembly final week.

The remainder of the already-known transfer was based mostly on a adverse gamma positioning in-built October and was violently unwound, which then kicked off systematic flows.

Your complete rally has been constructed with a pile of very free sand, and once more, it wouldn’t shock me to see us go proper again to the place we begin over the following a number of weeks at 4,100.

The index yesterday peaked at 100% of wave 3, and sure, you possibly can depend the rally as a 5-wave construction up, and it’s doubtless utterly.

I don’t wish to get too far out in entrance as a result of we’ve seen these huge intraday reversals a couple of instances throughout this rally, they usually haven’t labored out in marking the highest.

A minimum of this time, issues appear to be in higher alignment, given there’s a depend that works; the VIX is shifting increased, and the can’t get extra overbought than it has been the final couple of days.

So once more, if that is some high, it could make sense.

Nasdaq 100 Rejects Latest Highs

What’s fascinating, I believed yesterday, was that the obtained above the November 2021 intraday excessive and shutting excessive, in addition to yesterday’s highs, after which closed beneath all three ranges.

What does it imply? It might imply a couple of issues or might imply nothing. I received’t speculate yesterday, however I’ll wait and see the way it develops. On the floor, it looks as if a rejection of the latest highs.

USD/CAD: Correction Over?

In the meantime, we additionally noticed the get away yesterday and push increased out of a falling wedge. Maybe the decline within the USD/CAD is lastly over, and there seem to have been 5 waves decrease since peaking on November 1.