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As The Director can attest (who has to endure SMS texts from me anytime I’m freaking out), I was more than a bit peeved at the market this morning. Whenever I get that way, I take a breath, empty out my Bear Pen completely, and go through my entire Core List to seek out short opportunities. Below are the twenty-seven members, nice ‘n’ fresh, with those in red representing positions I was already in. I’m going to sit tight until after the FOMC Wednesday before expanding into any new positions.
The $VIX is a curious creature to analyze, since it is such a different beast than most other kinds of charts. To get some fresh perspective, let’s look at some cruder granularities of this sentiment measurement.
First, let’s look at it from a quarterly perspective going back a third of a century. As you can see, the spike we enjoyed in volatility is very prominent, being the third-highest peak in this entire data set. The “Liberation Day” excitement (which feels like, oh, about 70 years ago at this point) was all too brief, but now the VIX is once again at an extraordinarily dull mid-teens level where it typically slumbers.
I wanted to highlight one particular index which has me concerned (as we ‘celebrate” two months of the market going straight up since April 7th): the Russell 2000. What we have here is a bearish setup (pink) and a bullish counter-setup (green) that are about to go to war. The $RUT broke to a new counter-trend peak on Friday, completing and pushing above the bullish pattern, and if there’s enough power to push the index above the dashed red line, well, God help us, quality of life for equity bears is going to recede from a “2” down to a “1”.
Two months ago, the market was absolutely electrifying. Day to day, one never knew what the direction would be, but whether up or down, it would be big. The daily swings were large, and sometimes historic. It was a ball.
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