‘False Peace’ for Markets? A Trader Is Betting Millions on It

[Sanguine]

AUSTIN, Tex. — Last Wednesday was another good day to make money on Wall Street: Stocks pushed up, interest rates were at rock bottom and the VIX gauge of investor unease was again trending downward.

But as investors celebrated yet another bounce-back from a market slip, Christopher Cole, a trader who runs a hedge fund here that makes bets on various forms of financial apocalypse, spotted something amid the sprawl of data and code that decorated the wall of screens before him.

“Optically, volatility is still very low, but fear is increasing,” Mr. Cole said, pulling up a chart on one of his six trading windows. It showed that in the months beyond the 30-day period measured by the Chicago Board Options Exchange’s VIX index, investors were expecting some violent moves to come in the stock market....

https://www.nytimes.com/2017/09/13/business/dealbook/market-volatility.html

Not my area of expertise.  I look forward to comments.

[ShadowAce]

I think he's right, but I am not a trader.  I just think this fall is going to be rougher than most people expect.

[Free Vulcan]

Some of that is not surprising as we are past the summer lull and heading toward more active waters.

There is no doubt some int'l worries with NK, and even the $20T debt level might be weighing on the psychology expressed in the VIX.

We are bumping up on 2500 in the SPX and I expect it to go thru that w/o too much drama, then probably up for awhile from there.

After that I don't know, but right now nothing technical seems to be weighing on the market.

[Free Vulcan]

Another thing about the VIX. The S&P  can say go from a low at 2250 to a high of 2500, and the VIX will go from say 19 to 9.50. The S&P can fall from 2500 to 2380 and the VIX will shoot up to 19 again. Then the S&P can go from 2380 to 2630 and the VIX will go back down to 9.50.

Same VIX, higher S&P. So the absolute level of the VIX is relative. However, when it starts getting in the low 9's, look for a decent market tumble around the corner.