Ok, check this out: Look today's market action, and guess how much the $VIX is up today. Got a number in your head? Ready? Good. Now look where the VIX <i>really</i> is. Insane... I know.
I agree, very strange action in the VIX. I would have expected it to be up much higher, currently I have +.01 and the mkt is down 9 pts.
Vols are flat, unbelievable as it seems. I quote ~50 vol-spreads and combos to replicate strips, and they're all flat today on vol.
i think we have a HUGE rally coming up. vix at this level means that all the fearful people are already sold out, and have no need to use options to protect any portfolio positions.
the VIX has basically invalidated yesterdays drop in stock prices by trading down on the day. 10 ma is now heading down. VIX volatility is rather low considering other markets gotta be the lure of rate cuts or other stimulus on the horizon.
VIX is low because people are not scared. Its that simple. They are not willing to pay up for options protection considering we get the PPT rescuing the markets everytime we threaten 1370 on the S&P. We'll get a high VIX once we bust through 1350 and leave no doubts that we are in a bear market.
I bought below 1371 area on the test of the overnight low, and I did see the VIX reading at the time..looked good at least for a bounce. It was nice to run all the way back up to the high of the day session for a re-test..flat now and standing by for "beige book" fun. Market runs down and takes inventory from weaker hands below 1371 (stops from the overnight) .. and then goes up and tries to make a new intraday high and sells into the challenge of the previous HOD area..you gotta love this game.
Except VIX is a contrarian indicator. No fear means big drop. Plenty of fear means we're at a bottom. Generally speaking that is.