The VIX is surging on market fear, but not loathing
Changes in the volatility index indicate many on Wall Street are worrying about the next few weeks, but don't necessarily expect a major meltdown.
By Alex Rosenberg, CNBC
The CBOE Volatility Index (VIX), a gauge of market fear, rose above 20 on Monday for the first time in four months. But the broader action in the VIX suggests that traders don't expect the market's current rout to last too much longer.
Though the VIX rose above 20 for the first time since Oct. 9, the move in VIX futures dated to August, September and October has been much more restrained, with some longer-term VIX futures contracts actually falling on the day. This would seem to indicate that while traders are fearful about what the next month or two will bring, they don't see the current decline as the beginning of a more serious meltdown.
"Traders feel the event is happening right now, so they want protection in today's correction. Six months later, things could settle back into a normal market," said Brian Stutland, managing member of the Stutland Volatility Group and a major market maker in VIX futures and options.
This sort of action is typical for recent spikes in the VIX (which measures implied volatility based on the prices of S&P 500 options), but it need not always be the case.
"At the end of 2007 through 2008, or even when you saw the fiscal cliff worries at the end of 2012, they were taking up all of the VIX futures -- you're not seeing that now," Stutland told CNBC.com. "It doesn't mean there won't be volatility six months from now. What it means is that there's not extreme nervousness about any lasting effects about what's going on right now."
In fact, Stutland is predicting that the market has already reached its nadir -- and volatility its peak. On Monday, he took profits in the VIX and reduced his firm's exposure to volatility.
Holding longer-term volatility has not been a great play in recent times. There were only two brief periods in 2013 when the VIX topped 20 (in late June and in October); in each case, the action preceded a quick plunge in volatility as the stock market regained its footing.
Still, the fact that money is moving out of longer-dated VIX futures into nearer-dated ones certainly indicates that as the S&P 500 Index ($SPX) hits a nearly three-month low, the fear is very real.
"What this is telling you is that people are paying up for short-term protection," said Larry McDonald, a senior director at Newedge who writes at LawrenceGMcDonald.com. "The pros think it's going to get worse over the next three weeks."
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Everyone paying attention to the FED policy for the last 5 years understands what is happening.
But one things for sure, he will use this little crisis to promote his agenda, including spread the wealth. He probably won't be happy until its all destroyed and then it will be fair and we will all be equal. My God, who votes for this anyway?
What reality is the market based on anyhow? We have been pumping tens of billions monthly into the market like a junkie on meth. Where should the market really be now? 8K, 9K, or 10K. What is really driving the market. Shouldn't the market had an influx of retirement money before the end of the year.
Someone please tell what is driving this Obama economy. And don't tell me food stamps, healthcare, and unemployment as I am serious.
The US economy is going to collapse by Sept 15 2015 ...
1) The Death Spiral of lost jobs and an ever weaker and weaker economy is still with us
2) more retired people are taking money out of the market than newbies are putting into the market
3) For the market to be stable this year the Fed will have to pump 145 billion a month into it
4) Soon inflation will rear it's ugly head and the Fed will start to raise interest rates
this will cause CD's and other interest bearing accounts to out produce a falling stock market and make a good return vs inflation. So besides the retired people taking their money out of the stock market so will the smart money moving it interest bearing accounts pushing the stock market down down and down.
5) there is no coming back from this collapse the Fed will not be able to do anymore QE's and they will be forced to raise interest rates north of 10 percent to attract buyers to US Treasury bonds.
The sooner the market finishes off the street and the progressives, the sonner we get back to rebuilding.
Die market --- DIE !
There's No Need For Fear: "The "Bear Is Out of Hibernation"
Fear is what drove America during the "Great Depression"
" Fear of The Unknown " We know better and we understand now....
"It's not the end of the World" as most think it to be "It's the End of Wealth on Paper"
We got caught up in a "Feeding Frenzy". Stocks growing at an unheard of precedent, fed by cheap money and a Government buying back bonds at an unheard of rate.
The Corporations were grabbing the "Bull" by the horns, not just for the corporations but every 401k and retirement program out there. Everyone was yelling "More, More I want More". And Corporate America yelling "Yes, Yes You need More". And profits that should have gone into hiring and expansion went to profits of shares. Companies "Raising Their Own Stock by Buying Back Large Blocks of Their Own Stock". COE's selling "Stock Options" received when being hired made Millions....
And as the Government Created a false Market So Did The Corporations Themselves
Since March 9th of 2009 to Dec. 10th of 2013 the DOW rose "153.27%"
An adjustment is due and it will be " Of Great Proportion" and it should.
The Sun will come out tomorrow, the "Bull Run" is over BUT it will be back
Hopes and Dreams:
I hope everyone over the age of 55 "Sells their stock TODAY" and places it in a " non-taxable Cash Account"..
It's our turn to reap the rewards of a "Bull Run"..
The Companies, who have been buying back their own stock are as much to blame for this overvalued market as the Government is for making cheap money and buying its own bonds..
When the smoke clears, "And It Will" re-invest..
The "Bear" is out of hibernation.. but remember The "Bull" will be back.....
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The idea of US crude being a shelter from turmoil abroad may not be as far fetched as it seems.
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