Yo, Pit Crazies,
Speaking of investing …
Buying the S&P 500 had a 200 point range yesterday, 3500 to 3700.
That move was over 5% intra day and was flat out nuts.
So here is the scoop …
Inflation is here and it’s not going away. That means the Fed has to stay the course on raising to keep credibility.
For me, though, the larger tell was VIX barely moved yesterday ….
Will the rally off of 3500 hold?
In Order for the Bear to Go Into Hiding, Fiscal Policy Has to Change
A decade of depending on central bankers has weakened the G7.
They are now used to having the Great Central Banker fix all of their governance woes.
Most of the inflation we have currently is policy-related, so COVID lockdowns, spending, energy policy, mandates, etc. have pressed supply chains and demand in crazy directions.
All governments and parties own it and stocks are stuck with it.
For now, the Fed needs to stay the course to keep confidence in the bond markets.
4% -5% yields are going to look pretty good. The problem is all the paper funds that yield nothing.
That mess has yet to unwind and is why the VIX remains so high.
I expect more volatile markets intraday, but ranging around the middle. We might get lower than 3500 again if policy continues to ignore reality.
However, if we see signs of change, I like the bear to going back into his cave and VIX to get back into Zone 3.
The Rundown
SPYMaster
I closed my SPDR S&P 500 Trust ETF (Ticker: SPY) call spread and VIX call spread for a one-day 14% gain. The market neutral aspect of the SPYMaster program is made for this market.
To Your Trading Success,
AG