Justin Banks
Growth & Momentum Trader, Founder of Wolves of Wealth
With the VIX at 14.53, US stocks are back in the low-volatility zone where it pays to trim positions and reduce risk in the S&P 500 and Nasdaq 100. VIX levels have marked every major buying and selling opportunity since 1990, from the dot-com crash to the 2025 tariff selloff: below 20 means trim, 20-30 hold, 30-40 start buying, and above 40 buy the panic. For now, let winners run and do less. x.comÂ
Pullbacks in US stocks are buying opportunities, because every decline since 1950 has recovered. Since then, 5-10% pullbacks have come almost every year, corrections every 1-2 years and bear markets about every 10 years. People love buying after a 100% rally and hate buying after a 10-20% pullback, but fortunes are made in red markets, not green ones. x.comÂ
Short dealer gamma could amplify SPY and QQQ selling as liquidity drains. SPY's first long-gamma strike is 745 next week, a possible magnet; QQQ has no long-gamma floor in frame, with vanna near 700. A bottom looks likelier next week than this week, with chop between. When strength returns, probably late October, easing should flood equities sooner than most expect: a strong November, stronger December and a Santa rally, with high beta leading into year-end. Its early hourly turn could reverse. … Show more
The S&P 500 has no shock absorber with volatility this compressed heading into a weak seasonal window, and compressed volatility tends to snap rather than drift up. The VIX is near 14, its 2026 low, with the index near records and the August–October stretch and a debt ceiling about $1 trillion away ahead. Retail bears rose to 44% for a fourth straight week, which usually acts as a cushion since nervous sellers have already sold, and Fear & Greed sits neutral at 54. x.comÂ
Extreme fear has historically offered strong long-term S&P 500 buying opportunities. After VIX spikes above 30, 35 and 40, average 12-month S&P 500 returns were 23%, 28% and over 30%, respectively; after spikes above 40, returns were positive more than 90% of the time. x.comÂ
A new SPY low alongside a lower VIX high often, though not always, signals a near-term reversal. A roughly 30% VIX jump makes a shallow rally likely Monday or Tuesday, but after breaking below yesterday's low following a trend-line backtest, SPY still looks headed for $750 soon. x.com x.comÂ
US stocks could see a bigger decline over the next few months, as dealers are heavily short indices and long VIX futures, though that is not a timing tool. The key S&P 500 pivot is 7,620; below it lies 7,300 June-July support and, in an extreme case, the 6,878 yearly open. Seasonally, a low usually forms in October, and an election-cycle rally typically starts before the November 3 election as hedges unwind, absent black swans. x.com x.com x.comÂ
A sharp VIX spike followed by a reversal has historically favored SPY over the following weeks when VIX was at or below 25. After a 21% spike Friday and a 7% fall today, SPY's one-week return averaged 1.10% in 14 comparable events over the past decade, with gains in 12; the next-day average was just 0.07%. Could this have been capitulation? x.com x.comÂ
US stocks remain vulnerable because leveraged long positions could amplify an unwind of the mania. The SPY-versus-long-Treasury trade has given back only a few weeks of its gains. x.comÂ
Europe does not look great and the Middle East appears even more unstable than 52 days ago, adding to near-term risk for the S&P 500. Poor price action suggests its 52-trading-day streak without a 1% drop will end sooner rather than later. It is probably a decent time to sit on hands instead of being a hero or panic selling. x.comÂ
Extreme fear suggests the SPDR S&P 500 ETF Trust is closer to a local bottom than a local top. The Fear and Greed index reads 22, VIX is at 18, and the fund is only 2% below its all-time high. x.comÂ
US equities could see a bounce followed by a bigger slide, given the latest surge in yields. x.comÂ
