earnings

The big surprise today is that the economy shrank in the 4^th quarter of 2012.  The market did not really care most of the day, as the SPX traded a near term high of 1509.54.  The fact that the government is starting to reduce its influence on the economy is probably for the best.  If we get out for just modest declines in GDP, that will bode better in the long term.  Take the short term medicine now versus a big slug in 4 years.  What I think this does is draw a picture of lower realized market volatility for a while.  It might not stay at 4% like it is but it could stay in the low 10’s.  That brings me to the Facebook trading.

We have spent a lot of time in this blog chronicling the movement in Facebook.  I think the stock has been a really good trader except of course for the $38 buyers on the IPO.  It feels like nobody wanted the stock at $19 either because all the initial investors were getting out.  Some did for sure as was reported today but by and large there is a big group of holders not quite ready to hit the bricks yet.  The lockup expiration dates have been the great buying opportunities of the year for this name.  I guess the point is that when things are telegraphed this well in advance they are generally not what they seem?

I liked the special title there for our blog tonight.  For the most part the activity in the volatility markets was pretty muted today.  On balance some decent earnings but nothing to light a candle under the big indexes.  The NDX was up about .33% so the CES show was not exactly lighting a candle under the technology stocks.  I was reading a column in the WSJ not so long ago that the next technology innovations won’t be enough to spur economic growth or some sort of nonsense like that.  Some professor was espousing this idea and it reminds me of a quote from the head of the US Patent Office around the end of the 19^th century, “Everything that can be invented has been invented,” he opined in ….1898.”  Well he was a little bit off and while the CE

I won’t go through the VIX play by play today,because it was pretty straight forward.  The VIX November (and sometime December) future spent a good part of the day underwater, in doing so, showing that the VIX futures were slightly backward.  What does that mean?  Move movement in the short term as 200 point moves in the down start to ignite the realized volatility in the market.  My closet theory is that implied volatility will not drop until after AAPL announces.  I have no real proof for that, but this whole scene feels like last spring when the market was sitting on the big news.  It looks like we are waiting for Friday morning for any meaningful drop in volatility (or another pop), but right now, there is enough movement to support what is going on.&nb