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BofAML Warns VIX Complacency Suggest Stocks Fall Further

Tyler Durden's picture




 

While US equities have spent much of the past several weeks under pressure (the NASDAQ bio tech index has fallen over 21%, the NASDAQ Comp is down over 8% and the S&P500 is down over 4%), BofAML's Macneil Curry is concerned that the VIX index suggests conditions should deteriorate further before greater signs of a base materialize.

Since 2012 most tradable market lows have come only after the VIX has pushed north of 20%. It is currently only 17%.

In such an environment, US Treasuries should rally further. Indeed, US 10yr yields have broken below key resistance at 2.608%/2.632%, exposing the long term pivot zone of 2.469%/2.399%. The Japanese ¥ should benefit as well. The 200d in $/¥ is key (100.81) A break below would do significant psychological damage and force out many trend followers.

Chart of the week: The VIX is not where it needs to be

 

While US equities have fallen sharply, the VIX index still shows signs of complacency. Historically, most tradable equity bottoms transpire after the VIX Index trades above 20%.

With it currently residing at 17%, the S&P500 can deteriorate further towards 9m trendline support / 200d avg at 1792/1761

Source: BofAML

 

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Mon, 04/14/2014 - 08:12 | 4656268 MFL8240
MFL8240's picture

Higher they will take this ballon until the people wake up to the courrption in the markets and get the heck out!

Mon, 04/14/2014 - 08:14 | 4656273 Rising Sun
Rising Sun's picture

I always get my investing advice from a fucking bankster.

 

Thanks BofAML you fucking pricks.

 

Will happily do the opposite.

Mon, 04/14/2014 - 09:51 | 4656564 TheRideNeverEnds
TheRideNeverEnds's picture

yup, the bottom is in, buy the dip!

 

 

Mon, 04/14/2014 - 08:18 | 4656277 elwind45
elwind45's picture

Selling calls

Mon, 04/14/2014 - 08:51 | 4656373 Lewshine
Lewshine's picture

Yeah sure! Like the Vix, or any other metric is a tell in this chirade. Anyone short IS LONG TWO THINGS - BALLS and STUPIDITY!!

Fundamentals won't mean a thing till they lose the handle on what keeps the market propped up. Once the prop is dead - Fundamentals are key!

Mon, 04/14/2014 - 08:21 | 4656280 Quinvarius
Quinvarius's picture

I am pretty sure Janet doesn't have all the phone numbers she needs to arrange a pump.  She just got the job and I see no evidence she is able to pull the strings effectively, or accept she has to be dirty to do the job.  And for Bernanke to give her his contacts and methods would be an admission of guilt.  She needs to create her own crime ring.  Who would join her crime ring?

Mon, 04/14/2014 - 08:24 | 4656288 buzzsaw99
buzzsaw99's picture

so btfd then?

Mon, 04/14/2014 - 08:27 | 4656295 elwind45
elwind45's picture

Buying( wait for it)BONDS

Mon, 04/14/2014 - 08:27 | 4656300 AdvancingTime
AdvancingTime's picture

It seems many investors have little fear and continue in the "buy the dip" mode. I feel we been lulled into complacency by the extraordinary actions taken by central banks and governments over the last six years. Have these actions really worked or merely masked over major flaws and problems? 

By not demanding the right kind of growth and by throwing money at problems we have only delayed and added to festering issues that face us in the future. In what most of us view as a fast moving world many people have come to think if a financial crisis doesn't occur today or in the next few weeks it is simply not going to happen at all. More about how many investors have become far to complacent in the article below.

http://brucewilds.blogspot.com/2014/01/have-we-been-lulled-into-complacency.html

Mon, 04/14/2014 - 08:28 | 4656301 Confundido
Confundido's picture

To be fair, this article should also mention that consistent with this forecast, the author (BofAML's Macneil Curry) is recommending to sell silver and gold. He believes gold will go back to test $1,180/oz.

Mon, 04/14/2014 - 08:38 | 4656325 elwind45
elwind45's picture

Phone #? The fed calls the banks and given threats of stimulus coming off would just love to participate in the Fed's "free" credit?However if I am madam chairperson I would be miffed with the ECB since its past time for them to pickup QE slack in treasuries?

Mon, 04/14/2014 - 08:50 | 4656368 Unknown Poster
Unknown Poster's picture

The ECB's Target2 clearing operation seems like QE to me. They take on to their books Greek CB debt to the Bundesbank. The Germans then have currency issuing ECB as a counterparty instead of the Greek CB.

Mon, 04/14/2014 - 08:40 | 4656333 Dr. Engali
Dr. Engali's picture

Lol........The Bernank throws a five year party and then turns the keys to the house over to old Yeller so she can get stuck with the mess.

Mon, 04/14/2014 - 08:47 | 4656357 elwind45
elwind45's picture

I balance my approach buying everyother dip and sometimes I sell bonds to further saw that limb off? The Fed is taking what your making and calling it its own! You are the asset you productive SOB? The debt was accumulated by your parents to grow you up so YOU PAY not your kids not China YOU PAY

Mon, 04/14/2014 - 09:01 | 4656408 NEOSERF
NEOSERF's picture

Yes but look at that beautiful Fed insipired ladder...

Mon, 04/14/2014 - 09:17 | 4656456 Grinder74
Grinder74's picture

VIX shmix.  I want the next Rancher vs Feds showdown!  That was a reality TV show right?  Our government would never be that mean for real would they???????

#BuckFarack

Mon, 04/14/2014 - 09:22 | 4656467 Madcow
Madcow's picture

Anyone long Facebook should stop what they're doing and watch this immediately - 

https://www.youtube.com/watch?v=itvvFfeLh84#t=131

 

 

 

 

Mon, 04/14/2014 - 14:15 | 4657601 nopat
nopat's picture

Someone's baiting me with this article, aren't they?

 

Show yourself, fucking coward...

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