butterfly

VVIX down but VIX has it hair on fire

The current confluence of issues is the Ruble (Poor Vlad!), emerging markets and oil.  News in the USA after the Senate passed the spending bill is actually quite good.  Good numbers and low oil prices should set a nice stage for 2015 except you would not know it from the drop today.

Stocks dropped, VIX dropped and the vol. of VIX dropped.  The biggest reason for a drop in VIX vol. was the non-event over the spending bill but we still have a VIX over 20%.  SPX had a 38 point range or just about 2%.  The underlying flow of lower oil, unstable high yield emerging market bonds and tumbling currencies is enough to give traders worry.

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Mario plays Three Card Monti and wins

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The ECB had their big announcement today and, drumroll, they are going to do nothing else.  I think after watching QE in the USA and the never ending printing press in Japan, Mario Draghi is content to let Europe limp along and figure out a way to pay off its bills.  He will keep hinting at stimulus and  support but will not do anything.  He does not have to since the promise of liquidity is enough to keep the credit wolves at bay.

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Buy the rumor and sell the BABA

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Stocks are struggling today to make it to another record for the S&P 500.  As of right now a little push at the end of the day should do it.  Without anything news worthy I don’t expect stocks to do a whole lot.  A stock that has been doing a lot is BABA.

Alibaba Group Holdings, BABA has been on a tear since mid-October as it held up better than just about everything else with the stuff hit the fan not too long ago.  Chinese equities have done ok since then but nothing like BABA. Yesterday was the big Singles Day retail extravaganza and BABA pulled in more of their share.

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Realized vol show no signs of slowing down

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Did the Fed just do another QE? Or did I miss something?

Maybe it was the Europeans or maybe it was some jitters in China or Africa.  The FOMC suddenly lost it zeal for raising rates.  The economy here has been growing but not enough to satisfy our rate mandarins.  Maybe it is the TWTR/FB world of instant gratification but it takes time to get off the QE band wagon.  The Europeans are  in the tougher boat of restructuring economies since they cannot borrow at the rate they used to so they can pay all the benefits.  It does not look like Super Mario is going to finance that.  Better to have slow or even growth from restructuring than souped up QE.

 

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What is up with WAG?

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Step into the Wednesday time machine and not much happened between then and today.  Traders have been so lulled into a stupor with the lack of movement that they bid volatility up to 15% yesterday when it looked like there was another crisis brewing.  As of today no crisis, as holders of GOOG and other earnings reporters rejoice in the upside surprises.

 

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9 is the new 10

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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.

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Can the volatility really go lower, really?

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The market is shaking off a few key items:

               A new Fed Chairman that gave nice testimony.

               Uncertainty around Healthcare.gov or the certainty it is a mess.

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Skew inversion for FB

Today we have another sleepy day moving into the weekend.  As I write this VIX Is up about .18 to 13.15 but probably will not be there for long with the volatility futures hovering just up for the day.  As catalysts go, the consumer confidence number hit a 6 year high and that did not do much to push the market into higher territory.  My closet theory is the US budget talk is coming again and there has been a solid two year history now of how destabilizing that patter can be.  The current back and forth is not what I would call a bullish conversation.  The market in 2013 has weathered the payroll tax hike and spending cuts in, well, record fashion.  That should make the Keynesians go back to their drawing boards.  The

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VIX makes the high of the year

The bears were right.  The market was due to fall apart any minute.  The problem is that they have been saying that since 1100 on the SPX in 2011.  Today the bears were right and they will be howling about it.  The reality is the sentiment is now bent to the Fed getting out of the economy.  At some point we will figure out how much the market priced in the Fed gas by how far the market crumbles.  The SPX was down 40 handles and it felt like an orderly retreat.  How so you say that when the VIX made a year high.  It could have been much worse.

 

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