Thread by @RobertPBalan1

1/X
surfertrader (PAM Guru)
Sep 5, 2022 11:55 AM
Top panel: Linear Regression (Total Market Call Volume-Put Volume, 250D), VIX, SPX, SPX components market breadth (bottom of the chart). During this brear market phase, optimal local lows corresponded with:
(1) VIX spikes 82%-108%

2/X . . . (VIX cycle low-high).
(2) CVOL-PVOL breaking lower bound of the regression channel
(3) Market breadth in an oversold area (marked w/ dashed green line). Currently I see only the third condition met. Even if we bounce this week, this is not yet the optimal local low.

3/X
surfertrader (PAM Guru)
Sep 5, 2022 12:21 PM
The previous ~40% VIX spike corresponded with around a 10% decline in the SPX. We are about in the middle of the range of the last move, so the attack on this year's lows is perfectly possible. And bulls better have . . .

4/X . . . that VIX spiking to attract vol sellers or somebody will actually need to buy some stocks down there.

5/X
surfertrader (PAM Guru)
Sep 5, 2022 1:36 PM
Second scenario: no VIX spike but the lows hold. Investors find large caps trading at PE x16 relatively cheap, but above x18 to expensive. Prolonged sideways trading. This is probably the #MaxPain for most . . .

6/X . . . . of the active traders looking for a quick buck from a market crash and the others looking for a sharp recovery.