Friday's "bottom" FAILED point three

Hey there, it’s Brandon. 

Most traders don't know what to do after a Friday volatility spike. Here's my 20-year system for spotting REAL market bottoms.

Friday gave us drama. VIX popped, markets sold off, everyone's asking "is this the bottom?"

Answer: No. Not even close.

I've used the same four-point system for two decades to identify major market bottoms. Friday hit exactly half the criteria. That's not capitulation - that's just noise.

Point One: VIX Above Two ATR Keltner

Friday delivered this one. We closed above the yellow line - the two ATR 20-day Keltner channel. This doesn't come easy for the VIX, but it's also the easiest hurdle.

Getting above this level matters because it shows legitimate fear, not just portfolio adjustments. But here's the thing: you can close above it and still have more selling ahead. We've done it multiple times this year already.

Check. But that's just the appetizer.

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Point Two: SPX Falls Greater Than One ATR

Friday's one ATR was 56 points. We needed to close at 5283 or lower. We did that too.

This measures actual price capitulation alongside the VIX spike. You need both - selling AND fear movement. Can't have one without the other if you want a legitimate bottom.

Two down, two to go.

Point Three: VIX Backwardation (The Missing Piece)

This is where Friday failed completely.

I need the VIX 3-month divided by VIX to drop below 1.0. We got down to about 1.04 but never crossed that line. Today we're back up to 1.1.

What does this mean? The options market is still pricing an expectation that volatility will INCREASE over the next 30 days. When we flip below 1.0, the market starts expecting volatility to decrease.

That's your real capitulation signal. The market is saying "okay, the storm's over."

We're not there yet.

To find out the rest…

Watch the full breakdown here - including the breadth indicator that called June 4th's bottom, the XLU institutional activity I'm tracking today, and exactly what I'm positioned for next

Take care,

Brandon Chapman