While most coverage in the media is done on SPX and DJIA, the really interesting index over the last few weeks is actually the RUT. Take a look at the upward momentum in that index. Also, take a look at how fast that movement has been. It's incredible. At the same time the RUT IV is going no where. Take a look:
I guess the Russians not invading the Ukraine is enough for new all-time highs in the SPX. I have not gotten in the way of this market yet, and will not start now. The thing I am looking for is what is on the horizon that will make IV move next. Most likely that is the employment numbers this week.
Every so often, typically a few weeks after AAPL earnings, traders go a little overboard in selling AAPL option premium. Well, it's been a few weeks since AAPL earnings, and traders have sold AAPL IV down to stupid cheap levels...again. Take a look at a chart of VXAPL (the VIX of AAPL).
Yesterday, SPX down 12, VIX up 1.6 points. Today, SPX up 11, VIX down .6. This points toward a continued ramp up in volatility and fear in the market that is complex enough that the media aren't picking up on it, but simple enough that most traders see what is going on and are not wondering if, but when. Well, based on the action today, I would say soon. Below is a chart of VIX and SPX. Concentrate on the 50 DMA (the red line)
After again flirting with all-time highs, intraday stocks took about a .6% dump this afternoon following the Fed Board minutes release. They are going to continue to the Taper and there were even some hints at raising rates sometime in 2015, although that was just a few hawkish voices. The market had already given back some gains, then teetered into the red for good. The VIX was bid from the morning, so IV seemed to have an inkling of a move.
As we have stated, the SPX and the VIX are acting quite differently than the last time around. Previously, when the SPX was near 1840 the VIX was below 13, closer to 12.50. Now, with the SPX back at 1840 (getting there in a hurry), the VIX is between 13.75-14, and has not been able to break 13.50. In fact, adjusted for underlying price, SPX IV has basically stopped falling over the last 25 points or so. Take a look: