As I write this the AAPL WWDC is going full tilt and the stock has not been able to hold up for most of the day. Granted it had a near $40 run up last week, $606 to $642, so a pullback is not out of the cards. That run also helped push the SPX to record highs on not the greatest news in the world. Part of that run is helping to damp down the volatility a bit in the big indexes of which AAPL is a part.
Stocks moved sideways again yet found a way to make a new all-time high in the SPX. Not every stock was so lucky. Take Infoblox Inc (BLOX) for instance. BLOX came up on a volume screen and spent a good part of the day in the basement. For a stock that traded near $50 this year the fall was humbling.
I am fresh from a webinar for TradeMonster entitled “Trading in a Low Volatility Environment”. It was good to have so many questions about the alternative trade setups. The big takeaway of course is that a trade set up when vol is cheap has a certain character.
First, it was the vol of the NDX over SPX that collapsed. Now, it's RUT vol over SPX. The spread between SPX and RUT vol is getting REALLY wide.
Looking at the market rip up on the surprising housing news and the old highs are in the rearview mirror as stocks race ahead. Alex Jacobson, who I co-moderate the Options Block with on the Options Insider Radio Network, made a nice call last week watching the Dow transports make new highs and thinking the broader market was not too far behind. 1909 on the SPX and counting today as the shorts are going to have a hard time answering on this one.
Stocks briefly flirted with new highs today, but look like they will close up for the day. Slightly better housing news with a non-reaction to Thailand or Ukrainian violence also got the VIX to a 12 close. I am not saying stocks can't drop, but the case for up to flat is getting better. Part of the VIX is to forecast volatility in the future and for now there isn't any.
The Fed whispered it is looking at raising rates and we rallied. Why? Because higher rates mean economic growth and that is ususally good for stocks. The question is really more out into 2015 but still the Fed mandarins are kicking it around and we rallied. VIX got hit. IV got hit. Stocks felt the love with another run at a record probably a day or two away.
One too many mediocre earnings reports sent stocks swooning coupled with a “tough love” shout by one of the Fed bigwigs. The simple reason is that stocks have run and the reasons to keep buying them are less compelling. The big slowdown from the winter deep freeze keeps showing up in company earnings as many folks in the Midwest eastward stayed home and burned fossil fuel.
charts by www.Livevolpro.com
For now the very acquisitive DISH Network might be on the sidelines as the giant cable and communication industry goes through a massive consolidation. T is looking to buy Direct TV and DISH is quietly sitting on the sidelines. DISH tried to buy a cellphone company as an outlet for its wireless spectrum and they just could not get that done.