December 19, 2011
Good morning. The market posted a pre-holiday loss last week, with the SPY down 4.46 (3.5%) to close at 121.59. The VIX, however, was down 7.9% to close at 24.29, reflecting investor anticipation of markets entering a more holiday (meaning quieter and less volatile) period leading to the New Year. That would normally be the expectation, but the last few years have been anything but “normal” so if the premium levels decrease too much it might be worth putting on a position that would benefit from some unexpected movement.
You Can’t Be Half a Gangster
December 5, 2011
Good morning. It was a huge week for the market last week, with the SPY up 8.52 (7.3%) to close at 124.86. That number represents a gain of 2.3% over the last two weeks, and a decline of 1.4% from the close three weeks ago on 11/11. The VIX last week dropped a full 20% to 27.52, indicating strongly that the market perception of risk, at least in the short term, has dropped significantly. Why the sudden change in market attitude?
Morphing Into Moral Issues
November 14, 2011
Good morning. A nice Veteran’s Day rally on Friday had the SPY closing up on the week after a serious down move on Wednesday following a spike in Italian debt rates to well over the supposed 7% danger level. The SPY closed up 1.18 (.9%) at 126.66, with the ranges being a low of 122.86 on Wednesday after a high of 128.02 on Tuesday. The VIX was up slightly (.11) to close at 30.15, but had a spike to 36.43 during Wednesday’s sharp sell-off. In general the market remained driven by news from Europe, but it does seem that, in the absence of bad news out of Europe, the direction appears positive.
October 31, 2011
Good morning. It was a huge week for the market last week, with the SPY up 4.63 (3.7%) to close at 128.60. That strong up move was accompanied, as it often is, but an even larger downturn in the option premium levels as defined by the VIX. Those levels, the so-called fear index, were down a whopping 22% on the week to close at 24.53, the lowest close since August 4 of this year. Quite obviously the combination of headline news items associated with the sharp rally were the announced framework of a resolution to the Greek debt issue and some slight increase in the tone of domestic economic reports.
Riddle Me This
October 10, 2011
Good morning. It was a solid week to the upside last week, with the SPY gaining 2.3% to close at 115.71. The “relief” rally also caused the VIX to drop sharply to a level of 36.20, a weekly drop of 15.7%. A lot of this was due to a growing idea that the European debt situation was about to be more adequately addressed by the European Central Bank (ECB) and the governments of Germany and France.