Blog Archives
Escalation Clause
November 8, 2010
Good morning. Huge gains for the market last week, with the SPY’s up 3.6% to close at 122.72. This was primarily due to the announcement by the Fed on Wednesday that they were going to peg the so-called quantitative easing (QE II) at around $70B per month to a total of $600B. I think this number is in excess of the “street” number of $500B and I suspect the $70B per month is a little more aggressive than most thought before the announcement.
Skewed Volatility
October 11, 2010
Good morning. The Federal Reserve gave us another strong market last week, with the SPY up 1.93 (1.7%) to close at 116.54. That is the highest close in the SPY since last May 12. The VIX was down sharply on the week, closing at 20.7 (down 8%), which is the lowest closing since May 3 of this year. Again the investing public appears comfortable with the price of insurance on the market decreasing as the market advances, something that, to me, has always seemed counter-intuitive.
Traditionalists Ask “Why?”
October 12, 2009
Happy Columbus Day. Remember to feed the meters even though all public employees are enjoying a paid Holiday. More on that later. The market had a huge rebound week last week, and we are on the verge of totally forgetting that nasty, and ultimately forgettable to some, sell-off of the last two years. The SPY rallied from 102.49 to 107.26, a very large weekly move of 4.7%. The VIX was pummeled, starting the week at 28.68 and finishing 19% lower at 23.12. So we are to believe that not only is the market going straight up, and your investment in the market worth more, the insurance on the now higher value should be less. I thought the market was supposed to be rational?
A Fiasco Here, A Fiasco There
August 3, 2009
Good morning. Another positive week for the market last week, but the rate of advance slowed markedly. The SPY was up from 98.06 to 98.81, or .8% on the week. This increase was a little unusual given that the VIX was actually up significantly on the week, from 23.09 to 25.92. This morning, early, the S&P Futures are up another 10 points after the good car sale numbers following the “Cash for Clunkers” week. We also had a slew of Economists come out over he weekend, most notably Alan Greenspan, saying the recession is over and growth will be better than expected. It is almost frenzied, if you are a prognosticator, to get on board with how good things are going to get very rapidly.