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The FOMC released their statement today and the June raise is looking unlikely. 2016 will probably be the year when interest rates get back to normal but for now all stocks could do was muster a .10% move in the big indexes either way. We are starting to tilt toward good news is good news again but the sub normal rates and stocks are showing the indecision today with VIX trading 2015 lows.
I agree with the consus and believe that in the end, the Scotts will do the right thing and vote to stay in the UK. That being said, I think the market might have discounted that result a little too much. Take a look at the SPX strangle that expires on the opening print tomorrow:
LivevolX (R) www.livevol.com
As vol rallied earlier this week, it was noted by a few people that the spread between SPX vol, the VIX and NDX vol, the VXN is at its widest point in years. One might think that with the NDX calming down and VIX moving back to the sub 14 level that the spread would have tightened significantly...it has not. Take a look:
Stocks sniffed all-time highs again and pulled back from the brink. The simple answer is there is no reason to be running at all-time highs. That was enough to push stocks back off of their shiny new plateau. Since we are a volatility shop, let’s look at the underlying currents. The first stop is SDEX, it's still at nosebleed levels.
Charts by google finance
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There is no doubt we have had a whippy couple of days. Just when I though the Taper, FOMC and NFP were going to dominate the news along comes the Middle East dictator of the hour accused of using chemical weapons. This is an unfortunate and sad chapter for Syria as the Arab Spring tries to flower in other countries. For now rebels are stuck in a bit of stalemate and according to news accounts the Syrian Government is trying something new to break it. That brings repercussions from the US and possibly the UN. That is where we are and now the market wait
The market is falling off today mostly as a result of the chatter on the “taper talk”. With economic data improving the reason for the Fed to become a bigger holder of debt is looking less and less like a necessary idea. From a volatility point of view how is the market starting to absorb the fact that the easy money days are soon to be over? The answer to that is the upside in VIX is starting to pick up.