IN the last few days, since Bank of America took a dive on its earnings, the stock has found some real strength. BAC is now just a few cents from its 52 week high and threatening a 2 year high. The move has not been a slow grinding move like we see sometimes out of banks. It’s been a nice quick move.
This is why I am so confused by where BAC IV is trading. Take a look at this stock chart, IV graph (the red line) and 20 day HV chart (the blue line).
One of our Pro Clients had a funny quote in the Pro Chat today. He said, "The S&P 500 is up today. You don't see that every day. Oh wait a minute, yes you do." In a nutshell, that is what we have, a market that is finding new ways to rally on news like the better deficit numbers and greater bank lending.
While the market struggled today to find some kind of direction (no European bad, bad news on the funding front but no ECB goodies either on this European holiday), a few indicators are pointing south. Not market direction mind you but more of the market volatility variety. Each and every day, I see new 52 week lows for name implied volatility rolling across my screens. This means a few things: