Stop Trading

Tyler Durden's picture

No, really. What's the point?

Even Bloomberg, who is apparently a fervent reader, is chiming in on this observation and providing their 2 cents on the aberration formerly known as a market:


July 15 (Bloomberg) -- The VIX rose with the Standard &
Poor’s 500 Index, a sign from the options market that the
steepest three-day rally for stocks since June is poised to end.

The Chicago Board Options Exchange Volatility Index, as the
VIX is known, added 1.7 percent to 25.44 at 2 p.m. in New York.
The S&P 500 gained 2.4 percent. They have moved in the same
direction 6 percent of the time since January 2003, according to
data compiled by Charles Schwab Corp. The S&P 500 reversed
course the next day 66 percent of the time, including seven of
the past nine instances.

“That is remarkable,” Randy Frederick, head of trading and
derivatives at Charles Schwab in Austin, Texas, said of the
tandem move by the S&P 500 and VIX today. “The VIX is expecting
something here, either a pull back this afternoon or tomorrow.”

Both indexes rose on July 6. The next day, the S&P 500
retreated 2 percent. The volatility benchmark, known as Wall
Street’s “fear gauge” because it almost always increases as
stocks fall, reflects expectations for price swings for the next
30 days and is calculated from S&P 500 options that are one or
two months from expiration. Higher levels signal more risk in

The government’s weekly report on jobless claims tomorrow
may be spurring concern among investors, Frederick said. The
U.S. unemployment rate has increased to a 26-year high of 9.5

“We’ve had some unexpected numbers recently,” he said.
“There is probably an anticipation that could happen again.”
Consumer confidence unexpectedly declined this month,
according to a Reuters/University of Michigan index on July 10.

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Consistently_Incredulous's picture

Seriously... who is buying right now...?

zeropointfield's picture
zeropointfield (not verified) Jul 15, 2009 1:53 PM

Easy. Just press <help> for explanation.

Charles Wilson's picture

No, you misunderstand.

The machine is asking in its own clever Unix way, "Help! Need explanation!

Hondo's picture

I agree, it's a fools game know...........looking for suckers on the taxpayer's money.


While congress is in the investigating mode, lets investigate today's trading.......volume, manipulation, etc.


Undertaker's picture
Undertaker (not verified) Jul 15, 2009 2:06 PM

Chris Rea - The Road To Hell Full Version

EE's picture

With VIX increasing and S&P.. may be a good day to sell some calls?

Anonymous's picture

The people can not trust the Congress. If it weren't for the crooks in the Congress, we would not be witnessing the raping of USA.

Anonymous's picture

No point at all. Pardon me while I go get a new job. Oh, damn, there aren't any.

Undertaker's picture
Undertaker (not verified) Jul 15, 2009 2:17 PM

While congress is in the investigating mode, lets investigate today's trading.......volume, manipulation, etc.


That ain't gonna be nothing but a dog and pony show, these same whores are why we're here now.

Gabriel Gray's picture

Could you break down those vix/spx rises to options x week. I wonder what the %'s would be then.

Anonymous's picture

The VIX, as with any market tool, is being manipulated to sucker in more shorts. See LIBOR, GSCI, any gov't statistics....pretty much the whole *ucking thing at this point.


Anonymous's picture

The Fed put. Everyones goal in life should now be getting too big too fail. What a wonderful system. I like my moral hazard served cold.

Comrade de Chaos's picture

I suspect no one is buying. I doubt anyone has started to re-balance their portfolios. We have yet to receive a single customer call asking to be more aggressive. Actually despite the whole rally, they want to go more conservative. (!!!) Must be machines going insane. I mean how TF would you manage the risk when decision is taken in 1/10000 sec?  It's all skynet vs. HALO implementing havoc scenarios.

silencedogood's picture

Today looks like to me like a LOT of short covering.  The double head and shoulders pattern stopped the pop up pretty good.  Now that tomorrow's job numbers i am predicting will be WORSE (last weeks were based on a 4 day week!) than last may drop as people realize OH CRAP the fed said GDP will increase with greater unemployment and yet no one threw the BS flag on that statment!  I am expecting to see a 2% pullback at minimum tomorrow....we shall see.


Anonymous's picture

WOPR: "Would you like to play a game?"

FischerBlack's picture

You're getting short covering in equities and short vol covering on the VIX. Obviously few traders expected the size of the move today. Futures ran into some resistance late last night and to me it looked like there might be some opening strength, then a tradeable pullback. That theory was shot early. Even the VIX was behaving normally until 10:45 or so when everyone realized there was no reversal coming. I swear I could faintly hear the cries of 'Shit! Cover!' on the eastward breeze out of Greenwich.

Hours of entertainment today.

Shaza's picture
Shaza (not verified) Jul 15, 2009 6:15 PM

Been in cash for a while now, thanks for confirming.  Only winner is the Asia ex Japan fund I just sold( 200% profit for about 4 years) 

SloSquez's picture

Please, no KABOOM or To the MOON.... Please.

Anonymous's picture

WTF. Why am I still paying attention to this market? Might as well go to Vegas where I know what the odds are.

Anonymous's picture

why is the VIXX continuously touted as a simple 'fear gauge'.... even by blp ...anyone who can use google can see it is based on a formula based on spy is an easy example of this

FischerBlack's picture

VIX measures front month implied volatility of S&P500 index options. Not SPY. People interpret VIX readings to mean a lot of things -- risk, fear, etc. But these are just metaphorical interpretations. There's nothing rigorous or tradable about them. All VIX measures is implied volatility, and that's a very precise mathematical concept.


Added, today is just what happens when more people buy volatility instead of selling. The short vol trade has been crowded and unexpected big moves cause a lot of trade repair.


Added again, the difference between implied volatility of S&P500 index options and those with SPY underlying can create some pretty reliable arbitrage opportunities. Best of all, they can be delta-neutral.

Anonymous's picture

Reading the summary of the "Modeling High Frequency Data in Finance" ( I found the following:

"Finally, Prof. Florescu remarked related with point 2 raised by Prof. Los that in Oct 2008 the S&P500 and the VIX indices were perfectly correlated with a correlation of over 0.98. Since Jan 2009 this behavior has dissapeared completelly. Other participants remarked that this may be due to the new way in which porfolios are hedged since that month."

In my opinion this isnt evidence for anything, but it will be interesting to see if the same thing happens once again...

Anonymous's picture

This is the most blatantly manipulated market I've ever seen in my lifetime!!! Every time it's in danger of breaking, "THE MAGIC HAND" comes out of nowhere to drive it back to a "safe" level.

Anonymous's picture

Any theories on the "Magic Hand"?