VIX Decoupling Band Snaps Even As SPX Still Has A Ways To Go

Tyler Durden's picture

A mere 7 hours ago in "Just in case there is no deal" as is now the case, we noted that there was a considerable divergence between the equity market's roiling exuberance (and the accompanying over-confidence of the naive watchers) and the occurrences in the implied volatility world. VIX had decoupled rather notably from stocks (and its term structure had flattened as short-term protection was heavily bid). Sure enough, at the first sign of things not quite going to Plan (A, B, or Z), equity futures have collapsed amid a total farce of a market liquidity to recouple with volatility. With quad-witching tomorrow, we can only imagine the efforts the algos will be going to tonight to keep this afloat.

S&P 500 futures recouple down to VIX

 

Meanwhile S&P 500 futures are anchored to VWAP (but unable to break above)...

 

Of course, the whole point of this superficial equity-to-reality divergence was to fool - very successfully judging by the flash crash - both relatively smart market participants, what little of them is left, as well as superficial sidelines' commentators with zero trading experience.

 

 

 

Chart: Bloomberg