Andrew Giovinazzi's blog

VIX closes below the 200 day MA and the sky did not fall

Look for our volatility webinar this Nov 7th

Normally I don’t put much stock in 200 day MA but for the first day in a while things seemed to have to settled down.  VIX cash darn near broke through 16% before any earnings of consequence came out.  ATM volatility is down to below 13% in the Oct serial cycle.  Last week it was 18%.  The term structure for the VIX futures is back into a normal contango and the volatility productslost their daily gain status.

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Oct VIX asks if China will open already and .....

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I seem to remember this time last Wednesday when the SPX was trading just below 1900.  Chinese markets were closed for a holiday week and the weak jobs number on Friday created the whipsaw we had for the last week and a 100 point rally in the SPX.  Like we saw twice already since the late August debacle, the rallies were as vicious as the selloffs. 

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Falling like a BRIC

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I remember not too long ago there was an acronym given to the emerging markets star countries.  Brazil, Russia, India and China were  and are known as the BRIC’s for their buoyant markets and running economies.  What the heck happened?  In two cases oil crashed, some corruption in some others and an outright equity collapse from poor capital structures put the BRIC’s into the dust bin for 2015.  The SPX might be poking along but it is not down over 10% like the EEM is.

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China leaves a mess in the oil patch

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2050 to 2100 is the refrain.  Rinse and repeat as stocks bounce between those two numbers until something real happens.  The reasons for not going over 2100 are: No QE, oil prices and China is slowing down.  That is also causing what appears to be more than a temporary bout of deflation.  China has been consuming mass quantities and now not so much.  The Yuan devaluation was a rare misstep in what has been a historic growth trend in The Middle Kingdom.

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Someone is TWTRing the volatility

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Stocks ripped today on no real news.  There is some stimulus possibility out of China, the Fed is looking for more inflation and oil and other commodities stopped dropping.  Basically the same as on Friday except there was better headlines for news driven Algos to jump on.   Our chat room joke is SPX 2050-2100 SPX and it is either in one of those places or trying to get to the other one.  Today the SPX wanted 2100 and got it.  While the SPX is range bound TWTR is not.

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Who is crushing AAPL?

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AAPL is making a low that we have not seen since January.  Normally we don’t write about the stock because the trade in it is very uninteresting since the stock split.  It has rallied enormously since then but for now is suffering the same fate as all (2) the near 1 trillion dollar market caps suffer; a reason to go higher.  Today is a little different.

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Is it different this time around?

AAPL and MSFT got a black eye tonight on less than stellar earnings reports.  I think that represents around 20% of the market cap of the NDX.  All those that have been calling for the demise of stocks will have reason to cheer today.  Our rally to all-time highs got derailed by something normal like reduced earnings forecasts instead of Greece, QE or some other macro mess.  While financials and tech have powered us to all-time highs, energy, oil and metals are hitting some near term lows.

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Market still cares about Greece, sort of.

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The morning looked solid today as stock ran on GOOG, FB and AAPL rallies.  Financials look good as BAC is finally getting out from the constant deluge of fines from the financial crisis.  All was going just fine until reports of unrest in Greece started rumbling through the markets.  Treasuries spiked even into Yellen's hawkish rate tones.  Something happened and it had nothing to do with the USA.

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