Goldtent TA Paradise

Settling down

1. Fullgoldcrown says:

   February 15, 2018 - 3:38 pm at 3:38 pm

   Some pretty exotic indicators on that platform Mort

   Much more detailed than Stockcharts.

   what’s that top one all about ?

2. Mortdiggiddy says:

   February 15, 2018 - 4:14 pm at 4:14 pm

   1. VIX/VIX3M (VIX3M is formally VXV) http://www.cboe.com/products/vix-index-volatility/volatility-on-stock-indexes/cboe-3-month-volatility-index-vxv

   This is basically showing you VIX (Implied Volatility of SPX options expiring 30 days in the future) vs. VIX3M (Implied Volatility of SPX options expiring 90 days in the future).

   It is showing the ratio of the fear packed into VIX vs. the fear packed into further down the road. The ratio spiked because near term fear is substantially higher than fear 3 months from now. All options prices increased across the board for SPX nearly 6 months in the future based solely on the extrinsic value of Implied Volatility (IV) baked in. Call options at the bottom last week were SUPER expensive. You could actually be under water right now with call options bought out of the money at that bottom because the IV (extrinsic) is slowly being extracted.

   People made fortunes on the drop with put options because of the same reason. Not only were puts increasing in value on the way down (intrinsic) but the volatility baked into the option price (more in demand, more fear, higher IV) was boosting it as well. Call options were increasing a little bit on the way down too… because the sword is two-edged. Not as much obviously because call options lose value when the price decreases… but they were gaining some because all options prices spiked.

   2. VXST:VIX http://www.cboe.com/products/vix-index-volatility/volatility-on-stock-indexes/cboe-short-term-volatility-index-vxst

   This is similar to (1), but instead we are looking for the ratio of 9-day IV to 30-day volatility. VIX is 30 day IV. The spike shows that the fear RIGHT NOW is high compared to 30 days from now. These spikes usually mean that it will be over sooner rather than later, above the horizontal line is unsustainable.

   3. Percent of SPX100 stocks above the 50-day moving average

   I have found that 15% and 85% are good indications of oversold and overbought. Notice that in January we entered into overbought mode. In my experience when that happens it usually signals the beginning of the end. Once it comes out of overbought there is some kind of correction.

   4. 2 Period RSI, but wrapped in a 3 Period SMA. This is my favorite indicator. It works extremely well in trending markets for nailing pullbacks. I use it on 1HR, 4HR, Day, Week. It’s really quite excellent. This is Larry Connors stuff. He is a master.

   https://www.amazon.com/Short-Term-Trading-Strategies-That/dp/0981923909

   5. 2 Period RSI. There is debate on whether to use 5/95 or 10/90 as oversold/overbought. It is from that same book by Connors. The 2-period RSI system has been destroying any strategy on SPX for 40 years.

   Cheers.

   • Fullgoldcrown says:

     February 15, 2018 - 5:17 pm at 5:17 pm

     Morty : this is an entirely ‘nother level here.

     Welcome to the tent.

     You may not get a lot of comments on a post like this but rest assured hundreds of readers are making notes and reading this twice.

     🙂

     • HochsChild says:

       February 15, 2018 - 6:37 pm at 6:37 pm

       Yes, Mort, exactly as Fully said! Thanks.

3. Highroller says:

   February 15, 2018 - 9:16 pm at 9:16 pm

   second that, I still dream of reverting back to cassettes, much easier than downlowding onto a stick then wifi to my whatchamacallit! Not saying its’ wrong Sir Mort, just old age and the brain works slower and overload, your input greatly appreciated and will try to learn .The more ya know, the more ya don’t know 🙂

   • Mortdiggiddy says:

     February 16, 2018 - 10:50 am at 10:50 am

     If you would like great tool for analyzing backwardation/contango of the VIX futures curve have a look at http://www.vixcentral.com. There are amazing tools on there. Press the “Contango” tab and you will see just how far into backwardation this correction went (about 25%).