An Obama Bounce?
Most investors believed that the market would have a more positive response to McCain, but today's action is looking like an Obama bounce, given that he is so far ahead in the polls. I am just happy to see the market trade better, and for volatility levels to fall.
The S&P 500 is leading the way so far, spiking +3.0%. Small-caps are lagging +1.3%. And the only sector I see that is lower are biotechs, which is likely weighing on the Nazz.
The dollar is down sharply this morning, coinciding with a big boost in commodities. Gold is up nicely, and oil is surging nearly $4 to $68. Natural gas is also up +4.8%, and that is helping the energy stocks trade sharply higher.
Asian markets were mixed overnight, despite Australia cutting its benchmark rate by a larger than expected 75 basis points to 5.25%. Credit markets continue to show improvement with both LIBOR rates and the TED spread declining, indicating an easing of bank lending. Our 10-year yield is flat at 3.90%.
The volatility index (VIX) is tanking -14.5% today to 45.85. The recent uptrend line has been broken sharply now (it broke first yesterday), and the VIX is approaching its 50-day average at 44.4.
The VIX is now down almost -50% from its intraday highs on 10/24. That said, it still needs to fall all the way below 30 to get back to "normal" levels of volatility.
I have added a bit more long-side exposure to the market in recent days, but I still would like to put more cash to work. I had to chase the market on huge up days like today, so I will wait for a pullback before committing new funds.
long VIX puts