China leaves a mess in the oil patch

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2050 to 2100 is the refrain.  Rinse and repeat as stocks bounce between those two numbers until something real happens.  The reasons for not going over 2100 are: No QE, oil prices and China is slowing down.  That is also causing what appears to be more than a temporary bout of deflation.  China has been consuming mass quantities and now not so much.  The Yuan devaluation was a rare misstep in what has been a historic growth trend in The Middle Kingdom.

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Someone is TWTRing the volatility

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Stocks ripped today on no real news.  There is some stimulus possibility out of China, the Fed is looking for more inflation and oil and other commodities stopped dropping.  Basically the same as on Friday except there was better headlines for news driven Algos to jump on.   Our chat room joke is SPX 2050-2100 SPX and it is either in one of those places or trying to get to the other one.  Today the SPX wanted 2100 and got it.  While the SPX is range bound TWTR is not.

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AAPL Vol Ripe for Selling?

VXAPL, the VIX of AAPL options is sky high.  Its at levels I have not seen in quite sometime...into the low 30s!  Yet when I look at AAPL, I have a hard time imagining buying options with the belief that it is going to make a hard move one way or the other.  The fact is I think 110-120 migth be the range until there is a good reason for the stock to break out (I am not sure there is).

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Who is crushing AAPL?

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AAPL is making a low that we have not seen since January.  Normally we don’t write about the stock because the trade in it is very uninteresting since the stock split.  It has rallied enormously since then but for now is suffering the same fate as all (2) the near 1 trillion dollar market caps suffer; a reason to go higher.  Today is a little different.

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Oil Option Markets Calling a Bottom?

In 2009, the SPX continued to sell off, yet,  for the year, the VIX trended down, for the most part, all the way down to the bottom on March of 2009.  While the market was lower VIX was not much higher at all.  To many this pointed toward a sign that the markets were.

1.  Less frightened and buying less protection

2.  Potentially near a bottom.

Take a look at a chart of OIV.  Notice that while WTI is threatening to head toward its lows,  OIV, the VIX of WTI options is barely moving.  

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VIX MEH Signal Confirmed and Validated

In yesterday's blog we discussed how the VIX was not impressed by this rally.  Today I think its safe to say that the underperformance of the index pretty much confirmed.  VIX correlation to its underlying is one of the best way's to call a pop and this was no different.


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