2600 looms large. We discussed some trade ideas in our Gold Lab today and as much as I love some downside put spreads I can‘t help but think 2600 is soon. As we roll into the close VIX could not hold the 10 handle and the VIX futures could barely keep their tiny gains. Maybe 2600 by Friday since rallying is really all we do.
diagonal put spread
Well for GS, $260 we barely knew ya. After melting the upside for the 1st quarter of 2017 GS is actually down for the year and very near prices right after the election. The GS/Venezuela duet is not playing great in the news and the stock is getting clobbered. You would think the coming dump of US Gov securities from the Fed would push up rates but that has not happened yet.
With a remarkable lack of vitality the SPY is finishing lower then where it started the week. VIX could finish lower where it started this week as well. The FOMC did nothing really and nothing generally means lower vol and that is what we have. Not so for the big dividend paying stocks.
The biggest move today was not in the VIX or the SPX. It was in the German bond market where rates roughly doubled to .2% on the German 10-year. That is a big move there with traders jumping into the Euro and out of US Treasuries. Moves like that in the fixed income market tend to dwarf moves in the equity market. Remember the 2008 crash was a debt fueled crash that plunged us into a near depression. The 2001 crash was an equity crash that we quickly bounced out of. It might take awhile for volatility to wind back down so I am going to sit tight on that one for a day or two.
Stocks are shaking off just about everything at this point such as Iraq, Iran, Ukraine, Syria and of course that paradise on the Med, the Gaza Strip. Slow growth in Europe, who cares. WMT swamped in health care costs, take it up. Volatility, well just sell the crap out of it. VIX is now deep into the 12 handle and we might sniff 11% tomorrow.