Volatility collapses as uncertainty removed

With the Fed cutting monthly QE by $10bn, the uncertainty has been taken away, and equities soared. The VIX naturally has imploded, settling -14.9% @ 13.80. The outlook for the rest of 2013 is for the VIX to decay into the 12s..possibly even the 11s.


VIX'60min

VIX'daily3

Summary

Suffice to say...the 6 day run is over..and the VIX daily chart is offering an extremely clear bearish engulfing candle, with a break of the upward trend.

On any basis, the VIX will very likely slip further in the remainder of this week.

VIX 20s look viable no earlier than late Jan/Feb.
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more later..on the indexes

Closing Brief

With the Fed cutting QE, the uncertainty is out of the way, and that was a great relief to the market, which soared (after an initial drop to 1767 - a hit on the 50 day MA). The sp' closed +29pts @ 1810. Near term outlook looks bullish, with a year end target of 1830/50.


sp'60min

Summary

Well, that was the last big event of 2013.

I sure didn't expect the QE-taper a mere week before Christmas, but ..the reaction is exactly the sort of thing I was concerned about.

I hope you enjoyed it.

The rest of the year should see some follow through to the upside.
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bits and pieces across the evening

3pm update - so..err,...the Fed cut QE

The Fed cut monthly QE by $10bn, and after a very brief drop..the market soars...breaking into the sp'1800s, with the VIX getting smashed into the low 14s. Baring an equally bizarre swing to the downside into the close...equity bears are once again...nuked.


sp'60min

vix'60min

Summary

Lets get this clear..I was entirely wrong with my QE no-taper outlook until the spring call.

I am indeed very surprised.
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However, what I am not surprised at is the reaction of the market. With uncertainty out of the way, the market is soaring...after all..annual QE is still $900bn a year.

Bears face HEAVY QE-pomo tomorrow and Friday...and a weekly close in the 1820s is now very viable.

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updates into the close....


3.14pm... market breaks new highs..in sp'1803s.

I think we have clarity now on the rest of the year...and arguably..the next 4-5 months.

Target for this grand up wave is sp'1950/2050.


3.29pm...the only issue now is whether the VIX closes in the low 14s..or 13s. Which is one hell of a drop from the mid 16s earlier today.

A lot of good bear traders just got nuked today...some won't make it out alive today.


3.42pm..Bernanke concludes..for the last time.

Market soaring to new highs....incredible...but not unexpected.

No fear.. into 2014.