Tuesday, February 6, 2018

Time For Panic

What we've learned since 2008, is that zombies don't learn. ...Another day, another overseas selloff gets bought in the U.S., with both hands on 4x average volume. Every bubble has now imploded - short volatility, cryptos, pot stocks, momentum, Biotech, junk bonds, Chinese internet - except one: Amazon.com...

To put the magnitude of volatility into context, here is the S&P / VIX ratio:

"Good news, the volatility is over"

Listening to pundits across every news station giving their "informed" opinion on why the Dow had its biggest point crash in history - the volume of bullshit was astronomical.

"Markets remain thin, and they remain volatile...And quite frankly, after doing this for 50 years, that's just what you need for a bottoming process to succeed."

"In my 50 year career sniffing glue, I've found that record high volatility and record low liquidity are the secrets to a sustainable bottom"

"This is what a bottom looks like, in case you didn't recognize it last time"

In a nutshell, here is why the wheels are coming off the bus:

It turns out that VIX sensitivity has never EVER been higher.

And it gets worse yet, because I've noticed that every time Amazon takes a "dip" towards correction, the VIX goes batshit. So as long as Skynet keeps Amazon permanently bid above the support line, this house of cards won't explode with extreme dislocation. 

Otherwise, we will see a volatility spike that makes yesterday look like a picnic.

Yes, this again...

The short volatility bubble is officially over:

"Back in my day we only needed one retailer and one stock. To blow the whole shit show to kingdom come"

No one saw it coming...