In a strange move, volatility spiked at the same time as the stock rally on Monday: Here’s what happened – SPDR S&P 500 (ARCA: SPY)

Major averages closed similarly higher on Monday, reversing losses from the previous week. The buying spree can be partly attributed to profit-booking as some stocks turned cheaper after near-term trends that topped out in late November.

What happened: In an unusual move, even as stocks rose CBOE Volatility Indexaka VIX, also advanced.

SPDR S&P 500 ETF Trust DetectiveAn exchange-traded fund that tracks the performance of the broad S&P 500 Index, ended the Monday session up 1.44%. Incidentally, the VIX advanced 9.5% during the session.

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The VIX usually shares an inverse relationship with the S&P 500 Index and is the reason why the former is called a fear gauge.

Source: Bloomberg and CBOE

Anomaly Analysis: Commenting on the development, Market Strategist charlie bilello Said that it is rare to see that volatility increases so much with a stock closing higher.

The graphics he shared showed 20 instances since 1990 when the S&P 500 moved with spikes in the VIX. In these instances, only a fivefold gain in the S&P 500 index was appreciable – Monday was one such day.

Traders can price in high volatility on Tuesday and Wednesday, when November Consumer Price Inflation Report Further Fed decisions are due, respectively, he said.

Price Action: SPY closed up 1.44% at $398.95 as of Monday’s session Benzinga Pro Data.

Read further: Big macro data, Fed meetings obscure real opportunity, says Cramer, wants investors to keep ‘eyes open’

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