It is possible we are back to the days when the NFP numbers mean something. Stocks are more edgy lately as the intraday volatility picks up. The 16 VIX right now is justified on the touchy moves over the last 4 or 5 sessions. The bid for volatility today belies something else. I see some unrest potenital from PIMCO but I do not think that is it.
NFP sucked. The numbers were not great, but surprise, surprise the SPX ended the day up near another record. The law, in case traders have not been paying attention, is that low interest rates have been good for stocks. The ECB is lowering rates so that must be good for US stocks. Ok, anything that happens is good for equities. The bears might be right eventually if there is anything left of their PA’s when we finally crash.
Stocks are going to make a closing high today or near it as I write this post and I can’t help but think we would be way higher if Vladimir Putin could make up his mind what he wants to do in the Ukraine. We know what he wants to do, take a bunch of territory, but the Europeans are still threatening sanctions. That is keeping the VIX into another elevated close and vol. futures bid.
I like working at Option Pit with Mark Sebastian and I like our clients. Well one it is fun, most of time, and we have great clients. From time to time we get some solid observations from them. That is another thing I like. Having a different perspective from traders you have helped educate usually means some interesting stuff know the foundation is solid. So I am giving one of our clients some props here for this one. He knows who he is.
Note that when realized volatility dips below 5% on a short term basis it usually does not stay there for too long. I have 10 day RV down around 5.41%. Right now the first 3 Weekly terms in the SPX are all below 9%.
Close but not quite there yet. SPY traded 199.75 today as the 200 level hangs like the Sword of Damocles over the market. Everything is feeling good and long equity positions are kicking butt. In short living the good life like Damocles envisioned. However, the sword is poised to drop if Janet Yellen cuts the horse hair on rates and down the market drops. There is some weird tension on that tenuous horse hair of volatility.
Another day another rally in the good old USA as America Inc. keeps delivering the goods. More solid earnings and home start data got us off to another good start today. Market players are waiting on Yellen to report some lower to stabile rate news, which could send stocks even higher. I see that 200 number on the SPY and can’t help but think that is the next round number to cross the line.
Yet another rally on no bad news as stocks love the lack of action overseas. That was kind of a mouthful. There is no doubt that the gravity is pulling stocks up overall. The rally to all-time highs in the face of overseas unrest is just another reason to believe in the rally. Another reason to believe is the lack of a bid in IV. The VIX cannot hold a bid for anything even as a near panic hit volatility of Friday morning. By the end of today it was all forgotten.