D&D Note (6-28-2012)
CBOE Volatility Index (VIX) currently is at 19.71. Traditionally a VIX reading of 30 or over signals panic. Investors like to buy when there’s panic in the market because thats normally when you have capitulation, or in other words the bottom of a market. What the VIX measures is the implied volatility in options contracts in the S&P 500 index over the period of the next 30 days. Another name for the VIX is the “Fear Gauge.”
The recent high was hit on June 1st 2012 with a reading of 26.66. The last time the gauge hit 30+ was on December 8th 2011 with a reading of 30.59.
5-Year VIX chart:
The SPX hit its one month low on June 1st 2012 at 1278.04. On December 19th 2011 with the SPX at 1205.35 the index hit its monthly low and then rallied until April 2, 2012 when it hit its high of 1419.04.
5-Year SPX chart:
As we saw from the massive rally at the end of the day today we are a few European Solutions away from a market tear into the end of the year.
Todays SPX chart:
And that rally was sparked simply on the headline that German Chancellor Angela Merkel had canceled a press conference, having investors infer that the EU Summit was still in talks to deliver something. After the bell sure enough the EU Leaders came out and said they had approved a 120 billion Euro pact to stimulate growth. Although stopping short of saying where that money would come from…
Markets started off the day in a sell-off led by the ruling handed down by the U.S. Supreme Court which upheld ObamaCare and the individual mandate. The decisive vote came from conservative Bush appointee Chief Justice John Roberts in a 5-4 decision. The ruling is seen as a big political win for President Obama.
The DOW (INDU) was lower on the day by 25 points down 0.2%. The S&P 500 (SPX) fell 3 points, down 0.2%. And the tech heavy Nasdaq (COMP) fell 26 points, down 0.9%.
Overall the Tech Sector globally got hit today.
But one particular tech stock that reported earnings today fell drastically in the after hours. Research In Motion (RIMM) sunk 19% after trading had been halted in after hour trading. The company reported a 37 cent a share loss, steep drops in revenues, delayed the release of its new operating system, and announced they would layoff 5,000 jobs.
Oil fell $2.52 to close at $77.69 a barrel.
Gold fell $28 to $1,550.40 an ounce.
The 10-Year U.S. Treasury Note rose on the day pushing yields down to 1.59%.
Be sure to implore yourself with D&D’s “Comprehensive Long-Term American Deficit Solution” ~ aka How To Fix The Fiscal Cliff.
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