Flow State #88
Welcome back everyone!
First, I will cover some thoughts posted at the end of last week regarding the VIX. Then, I will move on to the Indices market structure using the volume profile. Just a heads up, all subscribers have access to the exact indicators I use on TradingView.
Now, back to the VIX.
Outside of what was already mentioned, there is nothing else to cover on the VIX. Many have argued that using technical analysis on the VIX doesn’t work, but I disagree when considering the other factors in play.
The main factor is the strength of the indices, which has fueled a thriving bull market for over a year. Back in April, there was selling pressure that spiked the VIX above 20, but it quickly subsided, leading to new highs. I believe bears need to break a key support on the ES before calling a top. In the very short term, we have seen strong downside movement, but I think we will witness an extremely strong rally over the next month. The key level I will be watching on the E-mini will be discussed in detail inside the chat, live.
Additionally, there are plenty of puts on the E-mini that far outweigh the calls. Naturally, many puts exist because funds use them to mitigate tail risk. What I want to highlight is that the current price is right where these puts are located, marking a support level. Many of these contracts were allocated before the selling began, and we will likely see these contracts start to get covered, providing market support for the next leg higher. Here is exactly what is being observed:
Now we can take a look at the chart of the S&P500.