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.
No it is not a tasty sandwich from the Potbelly shop close to the CBOE. It is a pattern we found in our chat room at the Option Pit. Yeah, Yeah I know you will say it is a “wedge’ but pox on that. It kind of reminds me of a sausage grinder. Meat goes in and sausage gets spit out. In fact one of our clients came up with that. VIX kept grinding with the SPY and doing nothing really.
Stocks looked ok today until Spain announced they have a case of Ebola in the country. It sounds like a non sequitur but a panic could be bad for mining, airlines and a host of other industries that operate in Africa and transport goods and people. Never mind that Ebola does not transfer from one person to another easily, but we are talking market sentiment here not rational behavior.
Another toxic brew for stocks today as equates drifted down around 1+% for the day. None of this was really attributable to the numbers. ADP was ok but the Ebola, HK, Russia, ISIS concoction of market sadness kept sentiment weak. Note how all the problems are more political than anything else. They need the will to solve them. This did drive IV up to some higher levels so those with some dry powder listen up.
Normally I would not do this. At Option Pit we pride ourselves on coming up with our own trading ideas so this is a bit of an aberration. Sure we use client ideas, but heck, they are our clients. This is one that came up in our Pro Chat and it led to a decent trade idea so I am going to share.
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.