Volatility fails to hold earlier gains

For the second day running, whilst the main indexes battled to new highs, the VIX started to break upward..with gains of 5% in the mid 13s. Yet, as is also often the case, the VIX melted into the close, closing +0.3% @ 12.81.  The market is entirely complacent of all future events.


VIX'daily3

Summary

There is little to be said about this.

There are a few out there buying VIX 'insurance' option Call blocks for June..and even much further out, but its generally very low volume.

The majority do not expect VIX breaking above 14/15 any time soon.
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more later..on those indexes

Closing Brief

The main indexes closed moderately higher, lead by the Transports with a gain of 0.8%. The break into the sp'1660s was yet another painful reminder to the bears of the underlying power in this market. There would now seem little chance of trading <1620 in the near term.


sp'60min

Summary

Another day of new index highs. Again, most impressive was the old leader 'Transports', which broke into the mid 6500s.

Market is due a small pull back, but that is going to be very difficult whilst QE-pomo continues. Friday has a very large pomo of 5bn, so those bears expecting significant downside are simply wasting their time.

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*I am back on the sidelines after a brief foray into Oil this morning. I will look to go long Oil again tomorrow. I'm still guessing the wider commodity group will play catchup this summer.

3pm update - cooling down

The indexes are continuing to cool down, and there is no reason why we won't be trading in the low sp'1640s early tomorrow. VIX is a touch higher @ 13. Precious metals remain very weak, whilst Oil is holding flat.


sp'60min

USO'60min

Summary

Market has relentless POMO-fuelled underlying strength. That will doubtless continue into June, but for now, we do look set for a little weakness into Thursday.

Bears should keep in mind there is a very big pomo of 5bn on Friday, which also happens to be opex. Could be a bit choppy to end the week!

*with equities likely to open lower tomorrow, it would not be surprising if USO is back in the low 33s again. Perhaps even 32s are briefly viable. In any case, I'll look to go long (again) early Thursday.