Sunday, February 25, 2024

#VIX Review $VXX #VX_F

VIX Review
Short-term price fluctuations do not influence long-term trends, cycles, and profitability. The majority, guided by price trends and emotions, concentrate on short-term trading noise rather than cyclical trends of price, time, and energy. This focus creates confusion, frustration, missed chances, and typically leaves them holding the bag during trend shifts. Investors can sidestep this pattern by embracing the Evolution of the Trade and aligning with the minority.

VIX's overall trend, revealed by trends of price, leverage, and time, are defined and discussed in The Matrix for subscribers.

Subscriber Comments

Adam Smith acknowledges the delicate interplay of countless individual actions and interactions by writing,

The uniform, constant, and uninterrupted effort of every man to better his condition…is frequently powerful enough to maintain the natural progress of things toward improvement, in spite both of the extravagance of government, and of the greatest errors of administration, The Wealth of Nations, Book IV, Chapter II).

This quote captures Smith's recognition that even in the face of unexpected events, such as governmental missteps or administrative errors (fiscal or monetary), the collective pursuit of self-interest directs the flow of capital, investment, and economic growth.

The Fed's decision to pause interest rate hikes, while remaining “hawkish” is beginning to release energy into trends that the majority does not recognize. The Volatility Index (VIX), an inverse play on stocks, is one of them.

The majority views the VIX as oversold (too low), thus, implying stocks are overbought. Remember, the majority never gets timing right, and frequently get caught holding the bag.

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Stocks bulls should be paying attention.

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