{
  "text": "foreign if there's still another turbulent week where the averages got smashed how much worse do things have to get before we stem the bleeding unfortunately I think we may need to see a lot more red before all this is over because the economy is still just so hot and the FED very much wants the market to go lower and he can't fight the Fed that's why whenever we get a brief route like that on Wednesday or this morning the cotton attempts you back into feeling bullish you need to stay cautious or even lighten up into a sharp quick Spike because it will probably have no follow-through like they all have had lately to bear props are always important the bear has not gone into hibernation at least not yet I'm going to stay on this case and if you try to poke the bear you're going to get more do not take it from me it's never going off the charge with Mark Sebastian one of my favorites he's a brain technician who's the founder of optionpit.com and he's also race for realmoney.com in order to get a better read of the action because he's our resident volatility expert and right now volatility is the order today I mean did you see how the way the market just collapsed today normally when the S P 500 goes lower the sibo or CBOE volatility index also known as the vix or the fear gauge is supposed to go higher and when the sap rallies the vix is supposed to go lower rational natural that's how things behave when a trend is continuing take a look at a pair of charts in the daily action the s p and the daily accident the vix when the s p found its footing in June which was a great moment I know it was just a great moment found his footing and started marching higher the vix steadily went lower that gave us a nice rally exactly as it should but now let's zoom in on the action of the vix since August what's weird here is that even as the s p started falling in late August Sebastian points out that we didn't see a strong move in the volatility units didn't see one normally you're expected to Roar and instead it had more of a slow rolling route and you can see this this is remember the markets going down the vix what and look that continued through early September the vix moved up sure but it wasn't at all commensurate with the Hideous declines that we've all been suffering the SP 500 even in a massive way of selling that began on September 15th the vix was relatively sedate it's only this week when it really exploded so why is the volatility index behave so oddly over the past month and a half why has it not helped us more Sebastian thinks that it's related to the massive upside being held and Vic's call options I never thought about this money managers buy these as a hedge against sudden bouts of volatility as of today Sebastian knows that there's a huge open call volume and Futures volume in the vix just November alone there are 131 000 vix calls with a strike of 35. they're 141 000 with a strike price of 40. and the numbers get even more Bonkers at higher levels 303 000 at 50. 256 060 then 230 2070 179 080. by the way if the vix goes to 80 you're looking at a total meltdown in the stock market I don't think it's going to happen but you know I am bearish put it all together that's 1.25 million open call contracts for the month of November alone as Sebastian sees it this means the Market's already somewhat hedged against volatility risk so the vix doesn't Spike as hard as when the s p gets pollacks as you would expect there's no immediate race for a hedge against volatility because Traders already have it on but suspicion points out that something's changed in the last week so I want you to take a look at this chart of the s p and the vix even though the selling in the s p has slowed versus where we were looking at earlier this month the volatility index has shot up much much more you see that boom it's like Traders suddenly decided that something big must be happening even though the averages haven't been getting hit quite hard as hard which is the best it's like the vix woke up why well it all comes down to bonds as I always tell you it's about bonds bonds bonds there's a reason to talk about the insanely high yield in the two-year treasury note every night which could still go higher as it did today I want you to take a look at this one this is a chart of the elk I know it's confusing I'm sorry the lqd ief that's the lqd is the ishares investment grade corporate bond ETFs well the ief is the I share seven to ten year treasury bond ETF in short this chart illustrates the relationship between investment grade corporate debt and government notes as you can see right around this time the vix began to blow up investment grade bonds totally tanked relative to treasuries oh yeah now check out this chart which shows the volatility index of the TLT the 20-year treasury ETF hit you can make a vix out of anything including Force bonds and right now the volatility of long-term treasuries is exploding higher especially this is a sign that Traders are really worried about what's going on in the bomb market like I am I'm not a Trader but I am worried about the bond market it's not good news because the bond market is much larger than the stock market and it tends to lead the way and the bond market is saying the economy is too hot and we have to take rates of big put it all together and while it's possible for the market to get a near-term short squeeze which is what I'm banking on Sebastian says the volatility index the bond market and bond volatility are all pointing toward lower stock prices in this view it's absolutely not the time to go along I understand that what needs to happen before we can buy them from a chart perspective suspicious waiting for the s p to go down while the vixel also goes down That's a classic tell that it solves coming to an end that does not happening right that has not happened he won't be willing to step in until the market goes lower on declining volatility how low could we go okay take a look at the action the s p over the last three years Sebastian's eyeing 3386 is his downside price Target so that's still here man that's actually pretty far away because yes that was the S P's pre-pandemic high and that's a lot of thinking is about what happened pre-pandemic that's down more than 200 points from here but once we reach that level he says we got to start buying I'm interested in that here's the bottom line the charts is interpreted by Mark Sebastian who is my favorite fixed expert suggests that this Market's got more downside and it's way too early to go really bullish not what anybody wants to hear but he's making a pretty compelling case call me a Believer as you know I think this Market is treacherous but unlike him I also believe we could get a sharp Spike up but for our travel trust if that happens we're gonna have to do some selling let's take some phone calls let's go to Lou in Minnesota Lou hi Mr drema thank you very much take my call I think you're working too hard I don't know how you can do it you're very kind thank you oh I'm telling you so my question is you know what about Walgreen you know it looks like it's going down down down and I would like to have you comment about well I don't think it's doing well I don't think it's doing better but it's uh CBS much higher stock I like to buy uh in retail the only charitable do I travel to us we own Costco and I think Costco is terrific and they do all the things that you get at Walgreens and they do it better let's go to Andrew in Minnesota Andrew hi how's it going is this stream Kramer how are you Andrew what's going on I am doing well wow what a long time fan and really school to talk to you uh so I had a question I just was calling to get your thoughts on 3M Company overall sure my father used to rep 3M so I got to tell you I am biased toward it now that I've said that though they have some combat arms litigation that involves noise in the ears of which I'm very familiar with and that's not going that well and they also have some uh your groundwater litigation both those are making so that I do not want you to buy the stock all right the vix ball market and bond volatility is interpreted by Mark Sebastian suggested this Market's got more downside and it's way too early to get bullish remember I think we have a spike up if we do because that's because it's oversold we're gonna have to lighten up much more man ahead we're playing a Kramer fave and my Diversified to see if your portfolios are prepared to handle the uptick in Market volatility then I have a plan for buying this Market that you won't want to miss and oil calls rapid fire tonight's edition of the lightning round so stay with Kramer [Music] [Music] "
}