Nothing seems to phase the stock market for more than a day or two.
Despite North Korea, hurricanes, poor earnings, and poor retail sales numbers, it’s tough to get a sustained rise out of the S&P 500 volatility index VIX.
I present a chart and a musical tribute to celebrate this phenomenon.
Weekly Vix Chart
VIX Just Keeps Gettin’ Harder to Find
This is a sing-along.
VIX just keep getting harder to find
And all your VIX ain’t bringing you peace of mind
Before you find out its too late, girl
You better get straight
No, you don’t need VIX
To help you face the world each day
That road goes nowhere
I’m gonna help you find yourself another way
No, you don’t need VIX (unless you expect to make 400% on VIX calls).
The above link discusses Billionaire bond guru Jeffery Gundlach VIX bet on which he expects to make a 400% or greater return.
I do not know what options Gundlach bought but I suspect he was up close to 100% within a few days, on that last VIX spike that went from 10 to over 17.
I also suspect he is now well underwater on the value of his options, simply due to time decay.
I have seen this play before. It’s easy to think more is coming then it doesn’t. There is still plenty of time left, assuming he has December options.
Mike “Mish” Shedlock
options insurance is unnecessary for institutions. Their trading algorithms can push a stock price wherever they please.
Brilliant
Is it because algos have no fear? Version 2.0 will have to fix this bug in a big way.
V 2.0 = market solved, go home you aren’t needed.
“Nothing seems to phase the stock market for more than a day or two.”
…
TINA … so “they” say.
Really don’t know or understand the stock market. But some obvious drivers – stock buybacks, global liquidity (BOJ and ECB still pumping out QE), and passive investing (the rise of ETFs – into the $trillions). And one maybe not so obvious. With the debt level on hold for months, Treasury not issuing debt provided more $$s available for stock market.
Now that debt ceiling raised (for now) Treasury back to issuing debt – the first day back in the market around $300 billion. With Trump not seeming to care about deficits (will get much worse if tax cuts passed), Treasury will be flooding the market with new debt. And if Federal Reserve follows thru with shrinking its balance sheet? More liquidity withdrawn from the market.
“phase”? You probably mean “faze” (to disturb or disconcert)
I love it when these gurus like Gundlach deign to communicate their high strategy to the great Unwashed. Pure beneficience, I am sure.
The assumption underpinning the underlying markets’ resiliency, whether consciously formulated or not, is that the markets are now almost exclusively owned by an ever smaller segment of the population. And that the Fed and regulators have those in that segment’s backs ,and will cover for them no matter what.
As long as there is at least some, any, however small, amount of wealth and productivity left in the livestock classes, who are outside of the above group, hence aren’t part of the “markets”, the game can continue.
Viewed a bit more broadly, to also include the livestock classes, it’s quite easy to see where the supposedly suppressed volatility has gone: virtually none of them have any savings left, nor any means of accumulating any, as all their income is already divvied up by the mandatory tributes they are forced to pay governments, the FIRE complex and other leeches. Nor do they have any other cushion to soften even the tiniest negative event or shock. Hence, their financial situation is very volatile indeed. But, since they are not allowed into the casino, their increased volatility does not factor into the VIX computation.
Think of it as society living through a cold spell. It’s quite easy for 1-5% to pretend temperature volatility is suppressed, if they can just throw enough of the remaining 95% on the fire, whenever it starts to get even tiny bit colder. But whatever volatility suppression is experienced by those 1-5%, is more than made up for by the poor saps, whose situation go from freezing to death, to being literally burned alive to keep the VIX low.
Looks like the $SPX and other markets did a Buying Climax – a stopping action – on Friday 9/15/17.
As long as $VIX is higher than the 8/8/17(L) , $VIX is in a good shape, pumping
muscles.
The $SPX, in it’s remaining strength, was able to engrave : 2,500.
Take flight….or not ?
http://www.independent.co.uk/travel/news-and-advice/ryanair-rights-400000-passengers-cancelled-flights-compensation-hotels-meals-caa-a7949916.html
I already told you. They were 5 month out puts. Coz is 30 day vol. 5months out don’t move like that. At most he was up 10-15 percent. Since then he has taken it in the butt.
I’d touch that up a bit now that I’m off my cell phone. 30 day vol went up 6% when he bought it, he also had a nice price move in his favor. % months out probably moved 30-40% of 30 day movement so I’d guestimate he was up about 20% in vol, and no idea in price (not sure what strike/s he bought).. so max he was up was about 30% (which is damn nice for a 1 week trade).
Since then, vol is where he bought it, price he has lost on as well since we are now higher, and time has been cruel to him, and now with 3 months to go, time part begins to accelerate it’s cruelty.
But it ain’t over yet, and ain’t gunna change his lifestyle either way.
Much more interesting is the chart of inverse volatility xiv
“Nothing seems to phase the stock market for more than a day or two.”
A year ago, 50% of global economies were growing. Today, 80% of global economies are growing. The US and Japan are growing slowly. Everyone else is doing quite well.
Well I guess if you wanna play the odds it’s a no-Brainer.. Just wait for me to go with the 99% sure bet then do the opposite. Ps…you have to pay me for the alert lol.
“Nothing seems to phase the stock market for more than a day or two.”
that’s because it really is different this time…