Here the potential failed breakdown last week and quick recovery back above the early 2013 lows. It’s when things like this occur that I get excited. The possibilities if correct are tremendous. But more importantly, if we’re wrong – who cares? The risk is very well defined. Also, between what I’m hearing from traditional media and the amount of bearish superlatives about volatility, I’m pretty sure we’re close to an important low. But the best part is we’ll know if we’re right very soon and the risk/reward is very much skewed in favor of volatility buyers.
$VIX going back a couple of years. Last time we were down here, Volatility spiked 23% in a few days and over 60% in less than a month. I think we can see something very similar:
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