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The SPX is down a whopping 46 points. |
Big deal, right? Less than one percent. The kind of move that makes you wonder why you even bothered opening your trading platform. |
But while everyone is yawning at another "nothing burger" day, something else is happening. Something that should have every trader paying attention. |
The VIX is up 13%. |
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That's not a typo. While the S&P drifted lower like a lazy river this morning, the vol market is screaming like a fire alarm. |
I've been trading volatility for over two decades. I eat, speak, and breathe volatility futures. And I'm telling you right now -- when you see that kind of disconnect, something big is coming. |
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Why Everyone's Getting This Wrong |
Turn on CNBC today and you'll hear the same tired story: "Markets down on Iran tensions." "Geopolitical risk weighing on sentiment." "Trump's Truth Social posts creating uncertainty." |
You know what? That's all noise. |
After 20 something years of sitting here, trying to tell retail people to stop chasing narratives, I've learned something crucial: the marketplace doesn't give a damn about your story. You just need to read that volatility is up. And that means the marketplace is projecting a little bit more risk. |
But you shouldn't care why the risk is there. |
The volatility futures market is telling you something the talking heads aren't: somebody is buying vol here in a big way. Not because of Iran. Not because of oil. Because clearly somebody thinks the market's going lower. |
Stop putting the story to it. The story is a bunch of crap in the here and now. |
The Math That Doesn't Add Up |
Here's what's bothering me about today's action: the S&P is down 40ish points, but volatility futures are rocking higher. |
If I just looked at the volatility move, I would think the S&P was probably down closer to 100-150 points. That's how disconnected this is. |
When vol moves that much versus the underlying, it's telling you one thing: the market is coiled for much bigger moves than what you're seeing on the surface. |
It's like seeing someone's pulse spike to 180 while they're sitting calmly in a chair. Something's not right. |
What the Vol Market Actually Sees |
The volatility market doesn't lie. It can't afford to. |
The kind of moves we're saying today happen when: |
Leveraged positions get unwound Correlations spike higher Everything starts moving as a unit instead of scattered rotation
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I'm watching the advanced decline line showing what we would term full blown correlation. Almost everything is moving in unison. And when you're doing that is when you can actually stage much more significant moves in markets. |
The marketplace feels like it's trickling lower, but the volatility is much bigger move than the marketplace trickling a little lower. |
That's not normal. That's a warning. |
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The Bottom Line |
Don't get caught up in the stories. Iran, oil, G7 meetings -- that's all just narrative noise designed to make you feel like you understand what's happening. |
The vol futures market is telling you everything you need to know: something bigger is coming than a 46-point decline. |
When volatility is pricing in moves three times larger than what you're seeing in spot markets, that's not a coincidence. That's a roadmap. |
The marketplace right now is heavily correlated to the downside. The volatility is sitting higher than it should be for current price action. And we're sitting right at technical levels that have held for weeks. |
This isn't about being bearish or bullish. This is about reading what's actually in front of you instead of getting distracted by whatever story the financial media is selling today. |
Because when this thing moves, it's not going to wait for the perfect narrative to explain it. |
To your success, |
Don Kaufman |
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PROFIT FROM SQUEEZE BAR ERUPTIONS |
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+222% on PLUG... +100% on SLV... +72% on IYR
(Plus 15 other explosive recent winners using this exact method) |
PRO TRADERS REVEAL: How to spot the pressure building BEFORE prices explode. |
LIVE TRAINING: Wednesday June 18th with Don Kaufman & Brandon Chapman, CMT |
→ SAVE YOUR SEAT BEFORE IT FILLS UP ← |
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