47 thoughts on “CHART OF THE DAY – VIX

  1. Gary Post author

    Question. Who buys into a lock limit down market. The answer of course is no one. That is the potential setup for a repeat of 1987. No one would ever buy into a lock limit down market. The risk is just way to extreme.

    The only entity that could buy into that kind of risk is the US government. The PPT could buy into a lock limit down market in the attempt to stop a market crash.

    Does anyone really think the market reversed on election night naturally?

    1. vin

      What you say makes sense. But, so what? Those who bought SM has done well. Period. My friend, no one knows the future. “A bird in hand is worth two in the bush”.

      What does that mean? Simple. If had stayed with your expert advise on this forum I would have been sitting on significant losses. Now I sit on a handsome profit.

      That does NOT doubt your expertise. In fact I find the information you provide here to be quite useful and taking into consideration. And, your opinions are quite respectable. But, no one can be always right. There are no exceptions. Your record for the last few months is available here for everyone to see. It certainly ain’t perfect.

      Finally, I truly respect your expertise and opinion in general. As I mentioned earlier to-day I purchase [email protected]. But, gold will be hard presses to go up if the bond bubble bursts. Remember SM is not in the same league as the Bonds. There are major differences.

        1. vin

          Is that all you have to say about your record and your expertise of which you are so proud?

          But then you ain’t seen no nuttin yet if the bond bubble is about to bust. I wish you luck.

    2. TraderPete

      Yeah, Gary, you got that right. I remember those days when silver would go lock limit down for several days. No one was stupid enough to buy into that market. Unfortunately, silver and gold don’t have a PPT to come to the rescue. The central banks, governments, and the global elite hate silver and gold. That is, they suppress the paper markets so they can gobble up as much physical gold and silver for themselves as they want. Just look at how much silver JPM has gobbled up. You’re exactly right, all these markets are manipulated.

    3. GMoney

      Gary: Here is my theory. Those in power who have been freely manipulating the markets since 2008 may have that power revoked when Trump is sworn in. Therefore, they are manipulating the excrement out of these markets to line their own pockets before they lose the power to manipulate. This may be their last chance to make a killing. This may be why we are seeing such insane market movements.

  2. Gary Post author

    This is also why I think we have a bubble phase ahead of us in stocks. The PPT is encouraging extreme risk taking behavior by never allowing stocks to correct naturally. Eventually everyone figures out the market is “a sure thing” and then off we go into the next bubble.

    1. jeffd5584

      I view it as a bi-annual “pump n dump” scheme. These “V” shaped rallies occur literally a handful of times each year, no matter the “fundamentals”, nor market correlation, etc, etc…These things top out and then drift lower as if nothing happened. I believe that “calling in shorts” is the easiest way to generate them and the charts always scream “short squeeze” because normal bull markets don’t climb on a 60-80 degree angle (with no pullbacks).

      And no question about the lock limit down to 180 points higher in the same day (of course the ICL fell right on 11/8), but anybody who bought during RTH was annihilated (unless using options or options spreads).

      These “markets” are simply binary events with limited liquidity that can be pushed around by the TPTB and their connected cronies. I’ve seen enough of it the past few years to feel confident in marking that assertion. I often wonder if the “trust’s” of the Livermore area and their various “bull and bear raid’s” had anything on this group.

  3. Spanky

    Look at the $vix between 1996 and 1999. It went up, and we know that the stock market did.

    If anything, rising volatility and a rising market might be an indicator of the bubble phase.

      1. Paul

        Gary things are a bit different in Post QE market… that thrives on low volatility… making some of the move in vix… perhaps meaningless… I don’t see a problem with rising vix… all it has done so far is moved back up to its 10ma (leash which normal… unfortunately the rally in SPX started on Nov 09, when it moved above the 50ma, which at the same vix moved below the 50ma… so for me any rising vix action that takes place below the 50ma might result in a very minor pull back which is normal… when the vix takes out the 50ma and the SPX breaks below 50ma… that is when correction begins… so word to wise… don’t jump the gun… all news today from the FOMC has probably already been discounted… since everyone knows the News… it is not worth knowing… again it all goes back to price action… I like and agree with you wait see approach into this publicity stunt… p

  4. Goild

    At face value…
    Early in the year gold led the miners in going up. Clearly gold is not done going down or consolidating.
    The miners still have a great gain this year so far and plenty of room to down.
    TIP has broken support, TMF is on free fall, gold itself is on free fall.
    Would it work having the bandwagon in front of the horses?
    I guess there is still time to get rid of the miners or to short them.
    Of halving the position…
    Daddy, daddy, I told you, gold is falling. Why did you bet the house on gold/miners?
    I will tell Mom!

  5. Spanky

    Actually a few years ago I predicted that the bubble phase of the stock market would be accompanied by a rise in the VIX, just like back in 1995.

    1. jeffd5584

      Then again that is exactly how the bagholders get dumped on. Create a neverending series of “V” ramp’s and it creates an emotional reaction in people who feel that they will miss out on the next “1999-00”. This market trades like a “bear within a bull”. I’ve seen enough of this PA in recent years whereby it flatlines for months, then spikes 5%-10% in one direction with no pullbacks only to reverse again. Only thing to do is try to identify extremes and position for some reaction

  6. Goild

    More seriously,

    Does anyone really think the market reversed on election night naturally?

    This is a clear example that there are entities strongly influencing the market, cannot be clearer.

  7. Pedestrian

    Last week I wrote a note here on the 30 year bond where I made the casual observation that it has moved in sync with gold and that both appeared to be on track to return to their respective late 2015 lows. Today I came across an article from Tom McLellan adding a little more color to that relationship and I thought it worth posting for those here who only follow Yen as a guide to gold. Tom notes this is really an abberation and is not sure why long bonds and gold are moving together. I doubt its a coincidence personally. Not after this many months anyway. But why its happening is likely going to remain a mystery unless you subscribe to the idea that rising rates really are the cold shower for precious metals that was once the norm. Whatever the case, Treasuries look like they will rebound smartly and gold should follow suit with at least a corrective bounce.

  8. ras

    Opinions are fine. But, price is the final determinant. Breadth peaks way ahead of price with variable lead time. What counts is price momentum. Price momentum for spx keeps powering up steadily, without wavering . SM is moving like a freight train. It may be unstoppable for a while. All that anyone can do is go where the price takes us with appropriate risk management. There is no profit in getting bogged down in a complex thought process of why the SM is doing what it is doing and fearing about a potential waterfall decline. Eventually, a profit taking event will occur.

    Pms are not the place to be for now. Gold keeps sliding down the lower BB. So far, it lacked the woomph to mount even a picayune bounce to the mid Bollinger. Evidently, at some point, this will change. We could get a spirited bounce and a retrace, setting up sideways move for several weeks, giving a chance for price to get into proper alignment with key mas. This could take some time. Patience, until then. We can only take what the market is willing to give us on its own time table.

    1. Pedestrian

      Picayune. Wow, been ages since I have read anyone use that word. It has all but been forgotten by most people. Nice choice.

  9. dboz

    While the author is a little on the exasperated side in this one, this article shows a great chart of peak gold being hit in 2015 and a fairly rapid decline in production coming quickly. I suspect the decline is due to the fact that physical prices are so low thereby generating less available working capital for which to develop future exploration and mining projects. So, one way or another gold is going to rise as supply is surely going to decrease. I know gold is more sentiment based for some, but it is still a commodity/money and unless demand totally dissipates, the price is going to rise and probably bigly. The more rare it gets, the more people will want it. That’s just how it works. Look at India right now. http://news.goldseek.com/GoldSeek/1481648997.php

    1. Spanky

      You don’t understand gold. It is different than every other commodity. Google “gold stock to flow”.

      Basically all the gold every mined in history is still above ground, being hordes by CBs and as jewelry etc. that above ground “stock” dwarfs the yearly mine supply (“the flow”). What that means is the amount of gold above ground barely moves year to year, and a supply disruption has very very negligible effect on the price. Gold has by far the highest stocks to flow ratio of any commodity–by a long long way. That is one of the reasons it is such an excellent and stable store of value and by far the best money.

      Can you guess which commodity has the second highest stock to flow ratio (a very distant second)?

      1. vin

        “Basically all the gold every mined in history is still above ground…”

        Is gold really that useless i.e never been used hence all of it still exists?

        Then why do you call it a “commodity”?

        1. Spanky

          Gold is one of the most useful metals in terms of industrial application. It does not oxidize or corrode, it is the most ductile metal (it can be beaten so thin you can see through it), it is an excellent conductor (it might be the best, can’t remember), it is essentially totally inert (unreactive), it is extremely dense etc. etc.

          The reason it isn’t used so much in industry is because it is just too expensive. and the reason it is so expensive is because of its monetary (and ornamental) value.

          1. vin

            Yes, it is very ductile and malleable. Silver is the best conductor both electrical and thermal. Yet because of other reasons silver is never used in wiring.

            You are right about these properties of gold yet it is not used as commodity. It certainly has been used as money for at least 6000 years. But, can’t it be replaced with something else? At present printed paper is used (more correctly misused) as money. How about Cyber money?

            btw gold is expensive mainly because it is rare and difficult to mine. Speculation and manipulation makes it even more expensive. There ain’t enough gold to be used as a commodity. Except for some cases, cheaper and some times much cheaper substitutes are available.

          2. Spanky

            Gold is in rare (finite supply), paper is not. Gold is divisible, it doesn’t oxidize, it is evenly distributed in the earths crust globally, unlike palladium and platinum. It is also very useful. It has the highest stocks to flow ratio by far. For all these reasons it is the best money. (Silver has the second highest stocks to flow ratio of any commodity but it is distant second.)

  10. Markab

    And the fact Platinum trades over $200 under gold and has traded below it now for several years, despite record worldwide auto production and a supposedly “booming” economy (to borrow an oft-referred term from CNBC circa late 1990s). Says gold will likely go down much harder…Platinum at $500 and gold at $400 soon.

    1. Spanky

      I don’t know about that. While the ratio may mean revert, they could both go up from here, with platinum just going up more.

  11. Spanky

    Also, you have to figure gold’s monetary value. If people fall in love with fiat, presumably gold’s value as money should fall.

    If gold is rising faster than an industrial metal (lets assume the industrial metal’s supply demand is constant) then we can assume that people’s distrust with fiat is rising.

    That’s pretty simplistic and probably flawed, but the point is you can’t just assume the ratio between prices will remain constant.

  12. BeKind

    I think that gold creeps up into FOMC announcement. Goes up after announcement and keeps going up to 1200 to 1210 without pullback trapping shorts. EVERYBODY KNOWS gold is going to get slammed down on the rate hike announcement right? Easy money! Bears or bulls that hang around too long can often be mistaken for pigs.

    If this correction in an ongoing mother of all bulls is ending, the price will make it clear soon. Perceptions can change rapidly as price changes.

  13. zkotpen


    I made it a point to write INTERMEDIATE and YEARLY in ALL CAPS for the purpose of clarity.

    Of course October was NOT the YEARLY CL in gold… as I wrote Tuesday morning:

    “…October as the INTERMEDIATE cycle low…”.

    “Gold didn’t close above it’s intermediate trend line. It didn’t turn the 50 day moving average back up. It didn’t complete a right translated cycle, and sentiment never reached bullish levels. The weekly stochastics barely even emerged from oversold and they should reach overbought or very close to it during the advancing phase of an intermediate cycle.”

    If you really delve into the matter, you will find similar ambiguities in cycle theory in its current use as those found in the wave principle. Likes money cycles described Monday’s candle as “45 LT F ??”, just like an alternate wave count in terms of uncertainty.

    Just as in the wave principle, even though a method or technique may not be perfect as it is used in the present, it will benefit from its evolution, if the underlying theory is sound.

    At any rate, we can revisit the question of whether Nov 9 was or wasn’t the INTERMEDIATE cycle high in gold AFTER we get a YEARLY cycle low. For now, I believe Nov 9 was the ICH, and you believe it wasn’t. We can’t be sure until after the YCL is complete.

    Meanwhile, two questions:

    1. Don’t you agree that a YEARLY cycle decline must have at least two INTERMEDIATE moves DOWN, with one ICH in between them? In wave principle terms, that’s an “ABC pattern: 3 waves down”.

    2. Regardless of whether Nov 9 was the INTERMEDIATE top or not, isn’t 10 weeks a bit early for gold to have an ICL???

    1. Gary Post author

      Gold is 27 weeks into it’s intermediate cycle. A bit long but not unheard of. The larger yearly cycle is bottoming right on schedule 12 months after the last one.

  14. Spanky

    The reason bitcoin can’t be money, at least according to many Austrian school adherents is that it doesn’t have barter value (i.e., it doesn’t have any intrinsic value outside of its value as a medium of exchange).

  15. zkotpen


    I agree in part with your surmise, that the YCL is still ahead for gold.

    But as I’ve been posting for months, I believe both long term bulls & bears will get clobbered over the next few years, if they insist on clinging to their positions and their bias.

    In brief, though your prediction may play out in the near term, I believe that gold has not yet consolidated the 2011-2015 move down enough to make the final move down below 1046*

    *An “undercut” low is possible near term.

  16. zkotpen


    The reason bitcoin hasn’t replaced gold is, it’s neither timeless nor universal.

    Milarepa’s mom sold a plot of farmland for 7 ounces of gold in 11th century Tibet. I am convinced that, so long as value has not been added to the land (buildings, zoning changes, etc.), that plot is still worth 7 ounces of gold today. (I do plan to check this out eventually 🙂 ).

    By contrast: How much does that translate to in bitcoin? Sure, you could do a conversion of 7 ounces to bitcoin, but she didn’t sell it in exchange for bitcoin.

    I believe we can chart the price of gold back to the beginning of history, by compiling any available records of (quasi) fair market transactions for a timeless basket of goods and services (such as food, real property, etc.) around the globe.

    In order for some form of electronic currency to replace gold, it would have to correlate to that timeless, universal valuation, and people (market participants in all markets) would have to accept that correlation as valid. So it could happen, eventually…

    1. daverobson


      I believe we will see a new low 1045 next year.(900)

      My main Elliott wave count from the 2011 top to the 2015 low is corrective. This is important because it suggests that new all-time highs in gold are ahead of us.
      The upward movement from the December 2015 low to the July 2016 high counts best as a 5-wave impulse. This is also very important because is suggests that after over four years of bear market, gold’s 6-month long, five-wave rally is just the beginning of a larger bullish structure. In other words, there should be at least one more 5-wave leg to the upside before any new lows below the December 2015 low occur, no matter what the larger wave count is.

  17. zkotpen


    As I’ve been saying for months, both bulls and bears will get clobbered in this bear market rally. Think March, 2014, but one degree higher. Remember how that was supposed to move on to higher highs, too? Triangle. A wave C of a triangle of cycle degree will have bulls drowning in their tears, but non-biased traders will just take it in stride and profit if they’re nimble & on point.

    I’m struggling to count five waves up, Dec, 2015 – Jul, 2016. I believe an impulse for wave A has been widely discarded by now, in favor of a primary wave W, first zig zag of a double zig zag that will exceed 1375 in the next primary degree rally.

    My reading is also 3 waves up, but I go one step further (less bullish) by thinking there will be only one zig zag up (not two), and 1375 won’t be exceeded until the bull resumes in about 10 years (más o menos). After all, another zigzag higher is not necessarily going to exceed 1375, especially if the current yearly (primary) correction is deep, or even forms an “undercut low”.

    And we know how much gold loves to form triangles in the wave B position. Wave A down took 4 years. Don’t be surprised if wave B (aka the bull trap) is more sideways than up, triangle, flat, or combination, and lasts longer than wave A did.

  18. ARends

    Gary, what do you think is the playout of T bonds ..a burnout down more or a snap back

    The sharp selloff recently in T-Bond prices has bled over into “investment grade” corporate bonds. But signs from the data on those bonds now suggest that the bond market is at an oversold extreme. We also see the bottom trend line broken.

    This RAMO (The companion tool to the McClellan Oscillator) has just recently plunged to a very deep oversold level, reflecting the strong downward acceleration in the bond A-D data. And now more importantly, we have a bullish divergence, with bond prices making a lower low but this Oscillator making a higher low. That shows a waning of the downward momentum, and is a setup for a rebound or burn?

    1. Gary Post author

      If bonds break their 2015 lows and just keep falling then we have confirmation the bubble is imploding.

      If we get a bounce maybe the sell off will be controlled and this will be the only bubble in history that deflates gracefully.

  19. Alexandru Popovici

    A bubble in stocks and commodities lies ahead of us indeed medium and long term.
    I suspect we can assign the date of July 11, 2016 as the 1st day of the new Kondratieff long cycle, hence we are about to face just as it happened during the 50’s:
    – growing but mild inflation (hence decreasing treasuries and Utilities),
    – growing USD,
    – growing commodities (despite a growing USD),
    – growing gold on the unofficial market (despite a growing USD) but not initially, not in the early phase of the new K-wave.

    But first, let’s taste this winter’s Scorch 🙂 – the leveling market event to pave the way for sentiment reset as a prerequisite for all the above happening.
    We have the first requisite setups of the SCORCH already: Utilities and Consumer Staples have bottomed while Utilities are particularly strong (yesterday broke their 50Wma).
    The rest is to come at its due time this winter! 🙂

  20. Look2525

    My View is from a Day/Swing Traders vantage point.
    Scorch not as you timed it and winter is a lot more vague than your previous forecasts. But I am with you, my system was indicating same for Spy two weeks ago (except for the fact, no Weekly channel top) until the high of Spy’s last Red Weekly Candle was broken last week. That forced my system to predict at least two more green candles. Last weeks and this weeks.
    If this weeks candle stays green, that is two greens. This will cause the Weekly RSI(2) to strike and stick top on my chart with Spy in a Weekly Channel Top.
    So I play Spy on it’s very big probability of the beginnings of a correction next week to its weekly channel bottom. Or this Week early should FOMC news begin that fall.
    I will begin to aggressively short off the daily/Minute charts to get under a play for the swing. Once in. Then out the break of a previous daily candle high. Until daily reset of RSI(2).

  21. bginvestor

    Hi Gary,

    I’ve been trying to absorb some your comments. For SM, are you thinking that its going to bubble further because the longer term market cycles (6 years from bottom to bottom) that was applied to the last couple of SM cycles have been ignored this time around, AND you think the system is currently setup that won’t allow for a market crash .. Is this the main premise? Thanks!

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