Compressed Volatility (SPY Update)

Here's the update to my Valentine's Day post. The symmetric triangle/pennant/wedge continuation pattern that everyone seems to be talking about came to apex late last week. I figured with all the bad news going around and the primary downtrend in place that the break out be decisively lower but instead the market has decided to chop back and forth in a narrow range for the last week. Most intermediate indicators are looking neutral and volatility seems to be getting compressed as the market waits for...? As I mentioned yesterday, there will be a ton of economic data next week and certainly disastrous earnings from the likes of Fannie Mae, Freddie Mac and most homebuilders. Perhaps that is what the market awaits before the next big move? While you know I am pretty convinced that this market is going to break down bad and soon, the chart is saying there could be a pop first. With certainly, I am definitely expecting volatility to explode (a big move) next week, one way or both.

Speaking of compressed volatility...



And speaking of exploding volatility...



Disclosure: I own SPY puts.