Welcome back, my friends, to the show that never ends. Welcome, welcome, welcome one at all to the Traders Market Intelligence Report. And this is for the week of the 24th of October, 2022. Hope you had a great trading week. I hope it has been a good week for you up to this point, a good weekend up to this point.
And I wanna start off today with looking at the VIX. You’ll see some color coding on my VIX and I’ll get into the details of this a little bit further down the road. But right now, the red zone is considered to be high, the green zone is okay, and the yellow zone, if you’re a buyer, is awesome as a buyer, okay? But green is where we’re looking at if you’re more of a, “I buy some and I sell some positions,” you really would like it to be low in the yellow zone if you’re just the buyer. For me, I do both, which is why my green zone is the one that’s in the middle, and that’s one that I put the highest focus on personally for me.
So the VIX came down a little bit on Friday. It came down 29 cents. Not a big deal. It’s not Friday, that’s really important, it’s what’s happening In the last week and a half or so, we have dropped and dropped and dropped and dropped from 34 to now we’re under $30 in the VIX. So that is awesome. Excuse me. But it is awesome, phenomenal, fricking amazing, whatever words you want to use for. I love the pattern that’s coming down. More importantly, we had a high here and a slightly lower high here. So if we can violate this low, we’ve already broken moving averages, if we violate the low, that’s right here, that swing low, it shows us a more historical pattern of moving in a downward direction.
Now, why is all of this happening? Well, if we look at the S&P 500, next, so we took a nice little bounce. This was last week, right? This was on Thursday of last week. We gave it all back on Friday. So Monday we had a gap – where was our close? Down here. We gapped up right to the moving average, the 8 pink line, and we ran just a little bit Tuesday. We had a nice gap up and we pulled back, and then we failed Wednesday, we failed Thursday, attempted above this .236, the hesitation level on the fibs, and we finally, finally got the breakout on Friday. It took some work, it took some doing.
We opened a little bit lower on Friday. We got a strong push up through the 3,700, up through the 3711. We closed in neutral territory right now. That happened a few days ago, right back here. But we were really tight on that 21 moving average. We were really tight with the confluence of the .236 Friday. Boom. We burst right through it and said, “Ha, I don’t care. We’re going to break that line like it never existed”, right? They were chipping away at the ice the last couple of days. Yeah, the ice on the ceiling this time. Okay? So we gotta close up above and we’re in neutral territory again, it happened a few days prior. We were in neutral, but man, we barely got in that neutral zone. The moving averages have started tightening up. Why? Because we’re not moving the last couple of days. We’ve been more of a sideways pattern for five or six days, right?
So the moving averages are tightening up between the eight and 21, the 21 and 55 still have some spread to them. If you’re not familiar with colors, look at the top right. The 8 is pink, the 21 is green, and the 55 is the brown one, right? And there’s a five in there also. But we only use that for one exit type in Power Option Plays. And we really haven’t had to use it in goodness, grace gracious, almost a year, cause of the way we’re taking our trades now, how nutty the marketplace is.
So what are we looking for? In a neutral bias, we can move in either direction, but if I had to pick a direction where I would rather see it go, I’d rather see it back down. It’s an easier pattern to get into. Well, can we go up from here? Yes. But for me to take a bullish trade, two things have to happen…One, the price has to be above the highest moving average. So above the 55 right now, that’s number one, but not enough for me to say, take a directional overnight trade. Second thing that has to happen is the eight must cross up through the 21. The eight moving average cannot be, jot that down. Cannot be the lowest moving average. If it is, don’t take a directional trade. I’m not talking in investments, I’m talking about trades. You have to make investment decisions based on what’s going on in the market and your risk profile. It’s a whole different game when you’re investing versus when you’re trading. Okay? So don’t make that as an investment, as a trade, rather, until you get those two things happen, close above the 55 and the 8 closes above the 21, not got above intra day, closed above those levels.
Once that happens, then and only then, are you okay, are you authorized, do I give you permission – I’m kidding. Do whatever you wanted your money, right? – But I give you my permission, my blessing to consider a string trade at that point. All right?
So where do I see us going this week? Well, the very first thing we’re gonna do is we’re gonna run into that .382, if anything at all, right? We’ve gotta get above the previous high we had here, not much above, not much higher, but we’ve gotta get above that high. That’s number one. And then you could see 1, 2, 3 days. The last time we pushed up at this 3 82, 3 days in a row, we pushed up, we pushed up a little bit more, we pushed up a little bit more, and we failed, right? We need to get away from that. We need to close above that 3790 level, that 3,800 we need to close above that level.
Unless we see that happening, I cannot get excited about anything to the upside at all. If we get that move, there is some potential for some upside for us to go. We don’t have major Fib lines, meaning like this 4181 here, or this 3382.50 level here. We don’t have those in our way yet. Yet do I believe this is a bottom in here? Hey, listen, anything is possible, right? But I don’t believe it’s a bottom. Do I believe the election results could help cause a bottom? Yes, depending on who gets elected, what we see happening with the government, the announcements that get made after that, if one party wins and they come out and say, We’re gonna spend all this money, we’re gonna do this, we’re gonna do that. It could cause the markets to go up or down, right? We’re gonna save money. We’re gonna spend whatever it is. It could cause the markets to make directional moves up or down. There’s talk of the fed potentially tightening into next year, right? And there’s, that’s where they start to see inflation kicking in and, and all of those types of things, right?
And again, it’s all speculation at this point. We don’t have a clear path to that at this point. Do we get a recession? Do we get the continuation moves to the, the upside on the interest rates? Does the Fed start backing down? Do they feel they’ve done enough? What happens with the war in Ukraine and Russia? What the heck is going on with Europe when, when the prime minister is there for like, what, an hour and a half and she quits, right? I mean, there’s so many things that could have a dramatic effect on the overall marketplace.
You’ve gotta keep your eyes open. So how do we trade it then? Rob, you’re gonna trade this based on the major fib, levels don’t do anything around those Fib levels. And, and what I mean by that is, unless we’re moving to something, use that to make a decision right Now, I’m in a neutral bias that tells me, Don’t you dare hold a trade overnight unless an investment of course trade. Remember the words trade, We’re not gonna hold that trade overnight. It’s a trade. We’re gonna be in and out today. Doesn’t mean you’re in and out every 15 seconds. I could get in at 10 o’clock in the morning and out at three 30 in the afternoon. It, it’s a day trade. It’s an intra day trade. I’m in and out the same day. It’s all it is. I’m not day trading with the SOES bandits – small auto execution system. Go look it up, right? That’s where you’re trying to get 12 and a half cents, one eighth of a point over and over and over and over and over and over and over and over and over again in a day, 50, 80, a hundred plus times a day. That’s not we’re trying to do here, okay? We work off technicals, not off of momentum, which is what that was, right? So look at the two fib lines that we’re at. If we violate and break through that a hundred point level to the downside, that 3,600, then, uh, 3,700. Then look at the next move down. Where’s the next fib line? If we break up and we break through to the 3,800, look at the next fib line. All right, there you have ladies and gentlemen, Make it a profitable day. Stay focused on the quest of becoming a great trader. Keep crushing it. And remember, you’re just one trade away. Take care of everybody. I will see you at our next update. Bye for now.