Tuesday, November 1, 2016

The Scylla And Charybdis of Clinton And Trump

Stoned gamblers voted early on Hillary, now it's too late to change their minds...

Despite the proximity to all time highs, the rate of descent from their ALL IN gambit caught the gamblers by unprecedented surprise. Now the cost of hedging (VIX) has been going up at the fastest rate since Brexit and before that August 2015:

"A surge in the so-called "fear index" that accelerated Tuesday — coupled with a relatively less severe selloff in stocks — gave traders a taste of just how much the broader market is unprepared for the U.S. presidential election and other events."

"The VIX, considered the best gauge of fear in the market, has climbed more than 40 percent over the last six days, while the S&P 500 has lost less than 2 percent in that time"

In addition, cash balances haven't changed, which means:

This chart shows the VIX as a ratio of Rydex cash (money market) balances:

For the vast majority, it's too late to hedge...

Index Put/Call ratio:

And therefore the only viable option is to do what's known as "SELL"...

Selling intensity (TRIN):