Stock Market - This is Not Going to End Well
Stock-Markets / Stock Markets 2014 Aug 22, 2014 - 03:11 PM GMT
ZeroHedge reports, “We are sure this will end well... As CDS-based credit ETFs are launched, so the number of ways to 'sell' volatility (buy complacency) for retail equity investors have exploded in recent years as The Fed's stranglehold on uncertainty has continued. However, as Bloomberg reports, as VIX has tumbled in the last few weeks, investors are wagering on further declines - in the five weeks through Aug. 15, they put almost $320 million into the VelocityShares Daily Inverse VIX Short Term ETN (XIV): the longest stretch of weekly investments since the note began trading in 2010.
The thinking, as SocGen notes, "given [The Fed's] ‘artificial cap’ on volatility, periods of correction are generally a good window to sell volatility." However, as history has taught us, "you have to worry about complacency. It’s been a Fed-induced calm," and won't last forever - ask the Japanese.”
Isn’t it interesting that sentiment peaks on Wave 2s?
Meanwhile, SPX is creeping up toward its July 24 high or its Cycle Top resistance at 1994.87. The jury hasn’t decided which level will repel the probe at the top, but we’ll know today which one it will be. A failure at 1991.37 may spark a Panic Cycle decline over the next two weeks.
GLD has sparked its Panic Cycle decline that may continue for another week or longer. There is nothing bu air all the way to 114.00, where there is a large Cup with Handle formation.
Regards,
Tony
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