SimpleSPYman Q + A
Week 05.01 - SPX/SPY Index Update
Love the simplicty here. That orange transition zone is really clever - basically your early warning system before things go south. I’ve been watching that 6890 level closley myself, especially with all the gold noise lately. Question tho: in those 1761 days, how long does price typically hang out in orange before either reversing back to green or dropping into red?
This can get wonky very quickly!
Time doesn’t matter. It is ever changing.
When volatility is low time is slow, when volatility is high time is fast. Just because we as humans function around these static time segments that we use to chop up our day, we all fundamentally know they are a made up construct.
“when the car hit me and I was thrown in the air it felt like everything was in slow motion”
I know this might appear to be the opposite to above but it’s not. The reason why it feels like slow motion is because your brain swaps from hundreds of very broad snapshots a second to millions of very narrow snapshots.
“There are decades where nothing happens; and there are weeks where decades happen.” Vladimir Ilyich Lenin
When volatility is low we have bandwidth to talk about which 73 ETFs we are tracking and why one might be a 1% allocation and another a 2% allocation. with VIX at 40 everyone only wants to know about the SP500.
It doesn’t matter how long the SPY might spend in the orange, what really matters is what is volatility doing and will the moves on lower timeframes cascade into sending our primary chart into breaking trend.
Here is an hourly chart and the same point on a 5min chart.
I know it seems very pompous to say “time doesn’t matter” but what I really mean is time in the way we think of it in planning a meeting or arranging a delivery doesn’t have a place in trading.
I cannot recommend enough a book by Benoit Mandelbrot The (Mis)Behaviour of Markets it has helped me massively. I first read it about 7 years ago and reread it at least once a year. Every time I go back to it with everything I have learnt along the way it helps me pull another nugget out of it, or get closer to understanding something I thought I understood (but didn’t) for a previous read.
I hope this helps or creates more great questions. Thank you.
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