Stocks are stuck to the vicissitudes of Congress until the recess on Dec 15th. I don’t see how much can propel us higher or to touch the ATH’s we reached earlier on Monday. The nagging bid for Treasuries is a bit disconcerting as well. Today we had the ultimate “What the Hell!” signal out of SPX, meaning VIX down, SPX down.
The rout in NDX abatted, see yesterday’s blog, but today is a bit of a goof. You can see from the Livevol™ chart that IV across the term structure got obliterated on the non-follow through from yesterday’s close. I think this is the vol saying something will get done, VIX down, but we are tired of waiting for it, SPX down. Maybe a little rotation back too. There is a trade for this.
IV expiring before Dec 15th will have a hard time holding a bid this week. Upside custom flies for credits at all-time highs in SPX should pay and leave room for a retest.