Don here...
The S&P 500 is trapped in the tightest volatility box I've seen in my career. Months of trade compressed into a 100 point range on a nearly $7,000 product.
That's barely a 1.5% band. And the market refuses to leave it.
This week was a four day session with a $144 expected move. We used almost none of it.
GDP came in at 1.4% against a 3% estimate. The Supreme Court issued a tariff ruling.
PCE data dropped. Consumer sentiment cratered.
The S&P 500 didn't flinch.
Tariffs, inflation data, geopolitical risk, a private credit blowup at Blue Owl that got swept under the rug. I threw everything I could at this tape.
Nothing stuck.
That's the part that makes this dangerous.
The VIX is rising while the market channels tighter. VVIX is north of 110 heading into the close.
One minute candles in the S&P 500 futures printed 40 point swings today only to reverse minutes later.
This is smoke without fire. And when the fire comes, I expect a 10% move out of this box.
The direction out of this box is a coin flip. But the setup is unmistakable.
6,850 on the S&P 500 futures has been the floor all week, tested almost every single session. A break below 6,800 into 6,750 territory and all hell breaks loose.
In tonight's video, I walk through the full volatility picture, the tech breakdown, and exactly how I'm positioning:
- Next week's expected move is projecting around $135, and this time the market should actually use it
- Microsoft looks ready to break lower, and I currently have a trade on anticipating that move
- NVIDIA earnings land next week after months of completely flat price action since late July
- Tesla has slipped from $500 to $411, down 6% year to date
- Broadcom's channel is starting to descend, and Google's rally looks like short covering
- The S&P 500 is flat year to date with zero net progress despite massive intraday volatility
The playbook right now is cheap shots on the edges. Out of the money call spreads, put spreads, and butterflies at the edges of the expected move.
Defined risk structures are the only way to play a tape this vicious. When the box breaks, those positions pay.
Click here to watch me break down the full volatility setup and the levels that matter next week
To your success,
Don Kaufman
Chief Market Strategist, TheoTRADE
P.S. Two money-back guarantees. Thirty days no questions. Twelve months if you trade it and don't cover the cost — I send you the difference. I don't offer that because I'm nervous. I offer it because I'm not. Christmas Trees hasn't lost a trade yet. Click Here to find out why.
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