VIX-ing the YINN, the YANG, and the SPY... in correlation charts.
Short term VIX is supposedly what the UVXY tracks... but, it does so, if not inexpertly... not at all slavishly. The UVXY participants often fade the trade with a clear bias that, sometimes might be deliberate misdirection... but as often might be a better considered biasing than that you tend to find in the more linear choices driving the SPXS trade away from its mean. Currently, on the 30 minute,VXST is lower... with UVXY tracking above it... which is unusual... but, with the market clearly in a decline, the UVXY is also lagging SPXS rather than running well higher ahead of it... which is also unusual.
So... ??? "It's complicated" seems the right answer... and the puzzle in my prior post re correlations between events in 2008 versus events now... are probably on point. The question is not yet answered... whether we have "plunge protection"... meaning "they" are going to work to sustain a more graduated decline... or whether "they" have "plunge protection"... meaning "they" are going to engineer the plunge in order to protect them from accountability for an array of other bad decisions... that "they" expect might be excused with the impact of inviting the impact from even bigger and badder decisions ?
I think its a close call... but, thus far, it appears the inflection in the trade we have is a bit less steeply sloped than that in the chart from the comparable period in 2008 shows... but, we clearly are AT an inflection point... where some change is likely... either becoming more like 2008... or less like it...
Which way that goes... and, critically, how FAST it goes from here... and how directly in terms of a pace in spreading away from the mean... versus reverting to the mean in a controlled pattern versus time... ?
That's the point in looking at the correlation charts... to see what they say about that... and, here, in using SPXS and SPXL for SPY... the VXST and UVXY for the VIX... and YINN and YANG as parallels tracking China's market performance vs SPY... we gain definition that might prove useful...
And, what you see here (charts below) has YINN and YANG helping provide definition in patterns (or deviations from them) that might not be made quite as obvious otherwise. The last mean reversion on the 30 minute completed on May 5th... and, since then... there's a general spreading from means as the market declines... but, also, a two day pattern in expansion from and reversion to the mean... suggesting tomorrow might be more of a "reversion to the mean" day... at least, if the patterns hold. And, that two day pattern and detail in intraday patterns are more apparent on the 10 minute chart. There is "more angularity" in today's trade... ? There is a deeper divergence than before... occurring on the four hour ?
And, on the 30 minute, there are a few oddities apparent in the UVXY... apparently showing those betting on the trade in UVXY are atypically reluctant, now, to bet on the trends accelerating... in the way they did recently?
Is that "VIX suppression"... or VIX traders recognizing something that is made apparent in these charts ?
That's really the point that needs noting... in the degree it relates to market perception of "steering currents"...
So, "they" might well "kick the can down the road" again... and "they" are experts in doing that... and have all the tools required to do that. But, "they" might decide, instead, NOT to protect you (the market, the economy) from a plunge... at a time when they are using that threat of a plunge... in the false hope that destroying the market will somehow control consumer price inflation... when it will not. In fact, what they are proposing in that vein... will make the problem dramatically worse... as "the solution to high prices is high prices"... depends on the market function actually WORKING to enable the market in "fixing" the problem with a deficit in supply... by "the market" making a larger supply available. What they are proposing, instead, is to deny the market that liquidity required... so that "the market" will not have access to capital to facilitate any larger supply... (or, the capital required to actually fix supply chain problems, etc.) It's the old management ploy of "the beatings will continue until morale improves"... which is brain dead stupid... but, so are they... The point in "a lack of pie" being a problem easily solved by making more pie... conflicts with their goals in ensuring there is less pie... with the smaller portions of pie resulting being (more expensive) ones over which they impose a more direct control. If you want any access to that lesser quantity of pie they intend to enable... you will limit your speech and avoid pointing out that they are stupid... and ARE the problem... So, they're trying that on, too... (although I don't expect it to work).
But, note... they're also proposing "taking the market down"... only AFTER the inflation has had its way for over a year... while they denied it... Likely only AFTER they've cashed out of the market... into dollars... which are currently rising as a function of other currencies being dirtier shirts... So, its probably not THEIR wealth that they're proposing to eliminate now ? Except... the mass of QE ties them to it... it being a tar baby of their own design... still leaving us awaiting their intended sleight of hand in the brier patch ploy... they have yet to reveal...
To be clear... the bubble in stocks is almost entirely driven as a narrowly focused "stock price inflation" fostered by money as QE targeted to driving stocks higher... while QE also functions both as a direct transfer of value from the economy to the banks... AND it has provided inflation suppression by limiting velocity, more as more is added... but, "more" only when there isn't inflation... and, when there is inflation... it instead provides leverage to amplify it... while converting QE back into more liquid forms of money than QE as by QT... tightens up the capital account... but with inflation already extant, only accelerates the inflationary impacts more, with leverage... as QE's inherent liquidity restrictions are shed along with its conversion... it proves less and less an inhibition to velocity the less there is of it.
So, QE ending... ? And, QT beginning ? On what timing ? Which days are going to be QT days ?
The real solution to the problem being avoided in both definition and solution... is to allow precious metals prices to rise... acknowledging the devaluation(s) of the currency(s) that have occurred... without which the imbalances in currency accounts grossly distort the entire economy... driving inflation to accelerate more. The impact of the distortion as it expands ensures "shrinkage" in "making less pie"... and that is also a function that will occur and amplify more... as crypto implodes... and directly (and rapidly) removes a more highly liquid form of money from the economy. Gold, silver and QE... are relatively illiquid forms of money... thus slow effectors. QE "slow" more by having additional ownership restrictions and by being non-transferable with use restrictions. Crypto... a different matter... its loss is seen as delivering "an aggregation of greater power" by those in power who are linked to competing brands of money. But, its loss will have large "liquidity" impacts... more in those markets where it is used, and where its users are focused... and that will be seen and felt as a devaluation of "self" and "society" by its convert holders now being alienated. Diversity in "brands" of money... pairs with a growing risk in the diversification in fighting over brand interests... thus, Balkanizing economic attachments: QE (a grant by special right) isolates banks proprietary interests from attachment to others in society...(as do the SDR, "Great Reset" plans, etc., by design). And, as does crypto... create "clan specific" money... making attacks on it... attacks on those in its clans. Gold and silver... are what they are... and, even when branded... fail to separate interests that way... and remain what they are... avoiding the amplification of currency wars that are fostered by competing monetary frauds.
The dollar (or any fiat)... once enabled as a driver of <fraud in "value" suppression trades> and <clan warfare>... will force theft to become war... The clan that controls the dollar... defrauds and enslaves clans forced into dependence upon its use without having that control. QE... is an adjunct form of money tied to a specific (related) set of frauds... its uses intended to preserve the legacies and power of those granted its use... in spite of (and because of) their prior practice of frauds failing. Gold and silver are "sound" money... in part...as they prevent those frauds in "clan" control of money...
In the degree there is "wealth effect"... from QE... that's not linearly causing the inflation problem... (QE is not "printing money" as much as it is replacing previously printed money that has evaporated) although it contributes to inflation indirectly in a "slow leak" from its narrow use restrictions... there are larger issues in the timing of the variable velocity impacts of different types of money (under different economic conditions) with different choices made. Can they control inflation by imposing a reverse wealth effect,,, as they are threatening ? Only "sort of"... but, the LEVERAGE in that trade... requires removing a lot more wealth than will matter in any "linear" construct of inflation suppression. "Wealth" being illiquid... and a slow effector... will have to shrink far more than linearly to reduce consumer price inflation imposed by other than wealth effect driven drivers. The wage slave paying rent or a mortgage and a car loan... buying gas, food, and paying a power bill... isn't going to do a whole lot less of those things if you make the entire society less wealthy ? Variable fungibility...imposes nonlinearity. And, (duh) driving the stock market into the ground... might not have the expected impact in "forcing" OPEC to lower oil prices... instead of "forcing" them to lower production rather than price... since you communicated you want "less" ? What worked in the past... won't, now... because... those things had dependencies... that have changed.
The risk is... they might be that stupid... and, even if they are not... they might be that corrupt... and evil... that they care less about the destruction imposed by their choices... than they care about "doing what's necessary" in protecting their power to impose it... while deliberately shrinking the pie to impose greater control over it...
The result, of course, is not only to impose less pie, by design... it is that the smaller pie intended will be both vastly more expensive, and vastly less well managed... and more "theirs" and less yours... than would result if "the market" were enabled to work... without the morons in control. They're fine enabling you in having less pie... as that enables them in having more ? But, a problem arises... when you are a made aware of it...
So, that's what in play... in this chart... showing you trends in "divergence" or "convergence" to the mean... the trends in the patterns in that likely much "closer" to showing you the patterns fostering "steering currents" rather than only showing the nature of the drift in one raft, only after the fact of it being steered. Convergence, from here (reverting to the mean)... means... a slower pace in decline... a bit less drama... the wheels not coming off... or, not today, at least... and not fully, just yet... ???
And, of course... its a dynamic... so the steering applied today... or this week... doesn't define much about the subsequent choices made in the day or the week after, or the week after that ?
And, of course... the components here are easily tradable... either way. So, if you can determine trends worth betting on (and some optimal element in timing) from the patterns in the correlations in the charts... down is still just as easily made up as well as it is down ? Note it interesting... that SPXS and SPXL are supposedly 2X while UVXY is basically a 1.5X now... while YINN and YANG are 3X... but tied to a different base even if one that seems it is largely back to performing mostly in parallel... for now...
Correlations tend to trend... but, they also change from time to time... and that might be just as true of performance differentials as it is true of other correlations sustained (or not) over time ?
Thirty minute, ten minute, and four hour charts... show different aspects of "patterns" within relevant times...
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