To The Moon

15% gain from taking puts from the start. The indecisive mood and tight trading ranges that have been characteristic of recent sessions will likely hold in the near term with a slight tilt downwards. 

⚠️ Looking at puts below 410 and calls above 412.1 with scheduled speakers and economic news releases to move the market on Wednesday.

The S&P 500 Index has been essentially flat despite first-quarter earnings coming in slightly ahead of expectations and increased anticipation for a Fed pause. 

The stress in the banking sector and the uncertainty over the debt ceiling continue to weigh down on sentiment for the trading sessions ahead.

What's Their Relationship?

While the S&P 500 and the VIX are usually inversely correlated, they sometimes move in tandem with each other. Because the S&P 500 and the VIX were both moving north on Monday, it may indicate the market is getting ready to make a big move in one direction, but traders are unsure of whether the direction will be bullish or bearish.

The VIX is used to measure the expectation of near-term volatility in the stock market, and volatility is used to gauge market sentiment, specifically the level of fear that exists in the S&P 500.

With the S&P 500 currently trading in a triangle pattern, set to meet the apex on Wednesday, the index may choose a direction before that date, which could increase volatility. If the S&P 500 breaks down from the pattern, the VIX is likely to surge higher and if the market ETF breaks up from the formation, the VIX is likely to fall lower and break down under support at $16.46.

Slight tilt to the downside 😨

The SPY Chart

The S&P 500 was attempting to break up from the upper descending trend line of the triangle on Monday, but on lower-than-average volume, which was holding the market ETF back. The S&P 500 has tested the upper and lower trend lines of the triangle seven times since the pattern began to form on May 1 but has failed to break bullishly or bearishly.

Both bullish and bearish traders can watch for the S&P 500 to break from the triangle on higher-than-average volume to indicate the pattern was recognized and to gauge future direction.

Poking to the upside 😅

The VIX Chart

The VIX has been trading mostly sideways since May 8, holding above 16.46 but unable to break above 18.31. Depending on which way the S&P 500 breaks from the triangle will likely determine whether the VIX finally breaks from its sideways trading pattern.

Profit from both sides 😂

@CaptainTiger @MillionaireTiger @TigerStars @Daily_Discussion