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VIX Tumbles To 9-Month Lows Leading Volumeless Stock Surge

Tyler Durden's picture


Wednesday is the new Tuesday. From the moment equities closed yesterday, they rallied on another macro data-less day. The US open sparked another JPY-based run higher and then the pump-and-dump after FOMC cleared the way for VIX - which closed at its lowest in 9 months (on the day the FOMC warns of complacency concerns) - to lead stocks back to the week's highs. Credit was not as excited - just like Monday (before Tuesday's reality-check for stocks). Goldman took the shine off things late on by explaining to BTFD'ers that "there were no surprises" and stocks faded modestly. Treasury yields closed higher (2-3bps) but rallied post-FOMC. Gold down modestly, USD flat, and WTI crude up to almost $104.


VIX... at 9-month lows on the day the Fed said " LOW VOLATILITY IN MARKETS MAY INDICATE COMPLACENCY"


The S&P 500 never looked back from yesterday's close...




As shorts were squeezed once again...

When stocks ran to the highs, it was all VIX...


As Bonds and JPY disconnected...



Just as stocks disconnected from credit in Monday and reconnected on Tuesday, so we saw Wednesday so the same...



Treasuries rallied post-FOMC (as stocks did)


The USD dumped after the FOMC...


and here's your day across asset classes...


Charts: Bloomberg

Your rating: None

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Wed, 05/21/2014 - 16:07 | 4782403 HedgeAccordingly
HedgeAccordingly's picture
Wed, 05/21/2014 - 16:25 | 4782487 Rainman
Rainman's picture

complacency (n) : a feeling of quiet pleasure or security, often while unaware of some potential danger, defect or the like.

Wed, 05/21/2014 - 16:11 | 4782424 Al Huxley
Al Huxley's picture

You know the old saying, 'buy in May, when the VIX is at a 9 month low and oil is over 100 and rising, and go away'...  or something like that, I can never remember the exact wording.

Wed, 05/21/2014 - 17:07 | 4782639 ACP
ACP's picture

Or better yet, buy when it's sub-10 and breaks the 20-year low of 9.39 from back in 2006.

Wed, 05/21/2014 - 16:17 | 4782443 NDXTrader
NDXTrader's picture

None of it matters. Fed speak, poor retail earnings, Home Depot, no BOJ action, nothing new from the Fed. It is all pre-planned, pre-programmed and airtight. If we ever do get the story someday it could be as simple as JPM, BoA, Citi, Citadel and a few other big players getting on the phone each day and saying red or green.

Of course CNBC is digging hard to get to the bottom of it - Headline: "Stocks Surge As Fed Signals No Rate Hike Soon". Now who exactly went into today thinking gee, I hope the Fed doesn't hike rates soon. The fact that they are even talking about the mechanics of it should have scared some people

Wed, 05/21/2014 - 17:07 | 4782640 buzzsaw99
buzzsaw99's picture

all stock market crashes since 1987 have been orchestrated by the fed. nobody is selling, and nobody will sell until the day the fed makes them sell. there is no market, there is only old yeller.

Wed, 05/21/2014 - 16:18 | 4782444 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

When I saw that we had gone under 101 on the yen overnight, I thought today might have had a chance at being ugly for the markets, but both the yen and Vix were attacked with gusto well before the open, and then of course it was off to the races. 

So how low can the VIX conceivably go? If it goes to zero, do the markets go to infinity? 

Wed, 05/21/2014 - 16:34 | 4782516 Eyeroller
Eyeroller's picture

Similarly, can unemployment fall to zero if labor participation rate falls to zero?

Wed, 05/21/2014 - 16:16 | 4782452 NoDebt
NoDebt's picture

Ancient Chinese Proverb:  May you live to see day of single-digit VIX.

Sounded a lot like "may you live forever" a few years back.  But now we know it was actually a curse.

Wed, 05/21/2014 - 16:18 | 4782462 hugovanderbubble
hugovanderbubble's picture

I have a dream VIX > 100% , Spain 05,21,2014

Wed, 05/21/2014 - 16:27 | 4782494 jtz5
jtz5's picture

When is this shit ever going to end? Looks like I picked the wrong month to buy TVIX.

Wed, 05/21/2014 - 16:37 | 4782526 Eyeroller
Eyeroller's picture

No, it's a great month to buy TVIX, with these lows.

I sure would have liked to have bought UVXY in mid-Januray so I could have profited the first week in Feb.

Wed, 05/21/2014 - 19:33 | 4783127 Turin Turambar
Turin Turambar's picture

Stay away from both TVIX and UVXY.  Trust me, I know from experience.  The only money-making position with these two is the counter-intuitive short, and that's only because of the ham-fisted, blatantly manipulated VIX slamming.  Shorting these two over the past 3+ years or so is like being the FED - printing money.

Wed, 05/21/2014 - 16:28 | 4782497 katwoman
katwoman's picture

I was in the SP options pit in '87 during the crash.  On the morning after the crash, the day Soros dumped his futures, the futures spiked into the 200's.  Yes, really.  For an hour it was total chaos and carnage.  I wonder at how the Fed can keep selling Vix here...

Wed, 05/21/2014 - 16:29 | 4782500 katwoman
katwoman's picture

I meant to say volatility spiked to the mid 200s

Wed, 05/21/2014 - 16:39 | 4782533 Eyeroller
Eyeroller's picture

UVXY didn't exist then.

Wonder what it would have been worth per share with VIX in the mid 200s...

Wed, 05/21/2014 - 16:49 | 4782564 ebworthen
ebworthen's picture

Bill Griffeth on CNBC said "It could be signalling a market top, but maybe that's just me."

Wed, 05/21/2014 - 16:56 | 4782573 khakuda
khakuda's picture

The Fed's actions all along have suggested that this will end with an enormous bubble in asset prices.  That is where the rampant inflation resides.  When you watch Bernanke going around telling hedge funds that rates will stay low forever and hear Kocherlakota and Dudley say there need to be inflation greater than 2% to make up for the low inflation, you know you are in trouble.  Had they not changed the inflation benchmarks dozens of times or looked asset prices, they would see inflation is actually very high.  But, they don't want to see it because they need to keep financing the deficits and keep the banking system solvent.

When oil goes to $150 again, rest assured the government will blame "speculators".

Wed, 05/21/2014 - 16:54 | 4782587 JustObserving
JustObserving's picture

If you do not know by now that US markets are completely manipulated and hence volatility is completely evaporating, your drugs are probably too potent.  Yeah, the sky is still blue. And you cannot grow dinosaurs from insects in amber.

Wed, 05/21/2014 - 16:59 | 4782612 KarlGDenninger
KarlGDenninger's picture

start loading up on Tvix

Wed, 05/21/2014 - 17:08 | 4782641 Xibalba
Xibalba's picture


Wed, 05/21/2014 - 17:08 | 4782647 I Write Code
I Write Code's picture

The decrease in volatility apparently goes back to last June under Bernanke, and is being pursued to an impossible end by Yellen.

I don't know what happens next, only expect at some point first it becomes obvious and even public what they are doing, and then that it explodes.

Wed, 05/21/2014 - 17:23 | 4782701 stant
stant's picture

Hump day bitchez

Wed, 05/21/2014 - 19:05 | 4783057 thismarketisrigged
thismarketisrigged's picture

the only thing i look forward to now every day is hearing rick santelli argue with that jackass jack on cnbc ( forgot his last name).

we can say the same thing over and over again, but its just so fucking predictable.


the fact that yesterday we had modest losses on the day, and by 10 am today, all those losses were erased is all you need to know.


if janet yellen takes a shit, the market spikes.


all i do now is youtube videos back to the 08 crisis and hope that not far from now we have something like that, if not worse in the markets.

Wed, 05/21/2014 - 19:16 | 4783091 I Write Code
I Write Code's picture

Has Yellen released yet the Dow chart for the next six months?

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