October felt like more than a 2.2% month for SPX. Maybe it was the fact that we had so many gap openings. Or, that the backtests couldn’t quite backtest. Maybe, it was just the channel that so convincingly broke down was suddenly resurrected the very next day — as though nothing had ever happened.
In the end, the month was characterized by a continuation of the VIX-driven algo-dominated meltup: 38 straight sessions (beginning 9/11) of VIX lurking below the bottom of a long-term channel, the bottom of which it used to tag once per year.
Even the talking heads are starting to question the quality of the rally. But, it’s still a rally. And, as long as the algorithms take their marching orders from a VIX that manages to make new lows, the rally will continue.
Last night, VIX dropped an additional 3.5%, sending futures up about 12 points to tag resistance yet again.
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