Considering that equities are still trading a bagel throw away from all time highs it was fascinating to observe a 28% rise in implied volatility over the past week. Now I concede that current levels are probably more in line with where the VIX should be given that we’re heading into a seasonally bearish market period of the year. August has acquired a bit of notoriety over the years due to a handful of negative outliers, however on average it is September and not August that you should be worried about (see Tuesday’s post on the subject).
Forget it, you will never be able to outrun a bear, no matter how fast (you think) you are. Bears have repeatedly been observed to not only achieve running speeds of about 35 mph but also maintain that pace for over two miles without as much as breaking a sweat. Compare that with the fastest human being on earth, Usain Bolt, who is able to reach a measly top speed of only 28 mph and that for about 100 meters plus minus. Lesson learned today: Never ever attempt to outrun a bear (or Usain Bolt), try to use your head instead.
The VIX closed at 9.17 yesterday and as the ES is pushing higher in early morning trading I am starting to wonder if we are getting close to breaking the old record of 8.89 which was registered on December 22, 1993. Which is probably the clickbait you’re finding plastered all over the financial MSM right now in eager anticipation of a new ‘record low’. Which however all by itself is relatively meaningless. Fortunately here at Evil Speculator we always pop open the hood and look at what’s really driving things – it’s time to crunch some numbers!
Yes, we are already three days into May but this kind of analysis takes a good mixture of time, attention, caffeine, and inspiration. But I think your patience will be well rewarded as we’re going to look at some rather fascinating charts. Now two weeks ago I posted a quick update which suggested that we may be at short term lows (on a daily basis) and that a reversal to the upside had good odds. Which is exactly what happened the Monday after when equities painted a big gap higher. You’re welcome, but thanks don’t pay the bills, so instead just sign up as a paying member and we’ll call it even