The VIX Has Bottomed… and 4 Other Thoughts on Today’s market
Want to Start Earning Bigger, More Consistent Profits?
1) Return of Volatility?
Volatility may finally be returning.
As you can see in this chart, the VIX hit a bottom last week at 11.02. It's now above 12 and I think it moves much, much higher from here. (full disclosure: I am long VIX calls)
We just went through 26 straight days without a 1% move in the SPX.
Volatility is mean-reverting. You never know exactly when the pendulum swings back, but I believe we are eyeing the seeds of it.
For example…
2) Russell Down?
The Russell 2000 is underperforming today, which is a reversal of the recent trend.
This could be a sign that traders are growing a little wary and taking some profits off the table.
Right now, the Russell is at the lows of the day.
If it makes even lower lows, the bulls will get more nervous.
3) Biotech!
The bios are underperforming a little bit today, but like the Russell, traders will get nervous if we see a real breakdown here.
For the past couple of years, biotech has been ground zero for speculative money, and when it breaks higher, the bulls tend to feel pretty good.
And of course, the flipside is equally true.
Bulls get nervous when the bios give up. IBB needs to hold $290ish.
4) Apple & Berkshire
Apple's (AAPL) mega rally off $91.50 was ignited by Berkshire Hathaway's buy of the stock.
Today, it's getting a little pop on news that Berkshire increased its stake.
It would be funny if Warren Buffett marked the bottom and the top.
5) Tomorrow Is a BIG Day
Tomorrow we've got crude oil inventories and the FOMC Minute, both of which could set off some fireworks.
Traders are once again completely confused over the Fed's direction, and maybe we get some clues as to whether a September rate hike is on the table as some folks have intimated.
And with the marketing teetering back and forth, maybe traders get worried if oil breaks down.
6) Twilio! (BONUS ROUND!)
Twilio (TWLO) is the current poster child for momentum trader wackiness.
It's still going strong even though some others like ACIA and FN are falling off.
If TWLO follows suit, it could be another sign of profit-takers cashing in.
By the way, a lot of traders are talking about TWLO as if it's a sure-thing short, but I would not touch it on the short side.
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