Volatility Picks Up

I never thought I would ever think that a VIX going up to 15 would be considered a VIX spike, but it is.  Going from VIX < 10 up to 15 is now considered a risk off move.  It is still a tame market, but at least we are beginning to see the volatility rise as the market has reached valuations that are increasingly unstable.  Valuations that cannot withstand 10 yr interest rates going up to 3%. 

Just take a look at a 2 year chart of the S&P 500 and tell me that you think this is a good time to start buying dips.  I was considering covering everything yesterday and maybe should have to reset my shorts today, but I will hold the position because I still see too much air underneath to 2805, and plenty of air below that to 2760.  These parabola type markets are notorious for violent shakeouts, because there is so much speculative money in the market during these type of moves.

We have the Fed meeting today, and end of month, wrapped into one.  I am hearing a lot of talk about pensions rebalancing from stocks to bonds but there is no definitive proof that they will rebalance today, instead of next week, or a month from now.   Usually pension funds don't trade much, and from what I have read, are increasingly looking to increase equities allocations for their "higher" returns to emerge from their underfunded status.  It is speculative to guess what they will do.

What I can surmise with greater confidence is retail finally getting confident about stocks.  You can see it in the global equity ETF inflows.  In the TD Ameritrade and E-Trade trade data.  I can just feel it now reading the Stocktwits stream.  The bullish bias has permeated the investment landscape.  It is really late in the rally.  I can only imagine the vicious selloffs with all this speculative money in the market.  It will make 2015/2016 look like an opening act. 

Looking for any bounces to be sold quickly in this market.  Staying short, but with one eye on the exit on the next down day.