New to this thread, but it seems like the best place to put this question. Is there a weird divergence between SPX and the VIX right now? SPX down 0.72% right now and the VIX is down 1.67%.
http://www.afr.com/markets/equity-markets/sp-500-weakness-hidden-by-megacaps-20151001-gjzil6 This is why the SPX has been so resilient, its not even representative of the market anymore...
Took 22 ES points (1890->1912) from last night's Eurasian runup (got stopped out somewhere in pre-market). Back in again long at 1905 in the last hour of cash, ES presently 1917. If we pass 1955, we're going to 1980.
While McCain's in the latter camp, there could be further pain ahead as more groups test their August lows. "We don't like to see the deterioration in the market, but you have to realise it's a natural part of the process," he said.
I sold all LABD today...daytraded it twice this week...but I'm done for now...going to wait until it drops into the 30's before I get back in...staying long LABU...sell price $23-$25. Then time to short biotech once again.
Also, much of the reason why the NDX/QQQ has been so resilient...Remember how a few of the tech heavyweights gapped up into mega-parabola's in July (GOOGL, AMZN) which masked the carnage in all of the lesser weighted companies...It's like a magic trick.
Yea, you have been talking about TF and RUT being leading indicators and they are. But then arbitrage back toward SPX as the spread widens. Seems like commodities plays, energy and biotech are truer indicators. Biotech indices have their heavy weights too but commodities not so much since thier heavy weights are leading down (debt very toxic). Energy strictly a day trade because of all the bogus trading news (but true energy fundamentals very bearish). S2007S's ETFs such as LABD/LABU, DWTI/UWTI, ERY/ERX, JDST/JNUG all strip out a lot of the heavyweight effect in these plays short term. The real breaking point with biotech heavyweights will be when the markets realize their debt is begining to become fairly toxic (see: romik's post about percentage increases in debt service in early stage Fed hiking). Hiking during a global downturn places corp debt in a precarious position. Once toxic debt becomes an issue, the financials will roll over. They have heavyweights also which people will pile into to no end. They have also been cleaned-up a lot since 2009. Hence FAZ/FAS. Also, as more and more people are short here, watch for China's bogus information machine to appear. They will start reporting major improvements in commodities and energy demand soon..major starts in manufacturing..probably will ease rates too. Don't know how long that will stick but it will create squeezes. Todays bogus run of crude at the open is a good example.
IMO fundamentals rarely apply to the front month crude contract. Just trade that think like the casino it is (technical analysis/sentiment/trapped players etc). The further timeframe you go out and/or the curve relationships is where fundamentals probaby hold more sway.