The Busy, Busy Algos

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The algos have been busy this week – typical for the low-volume holidays. VIX completed its journey back to its SMA200, even dipping below it for good measure……which bounced ES to just below its recent highs.continued for members…It feels a great deal like 2019, when news of the coronavirus was swirling around with most market observers assuming it would be a non-event. Omicron might also be a non-event, but I’m not sure it’s safe to assume so. If it infects many of the unvaccinated (roughly 40% of Americans) then it won’t make that much difference that a smaller percentage ends up in hospital.

Many areas of the country are already close to being overwhelmed as is from Delta and Omicron. A spike in hospitalizations could be devastating for them and result in another wave of lockdowns or partial lockdowns where admission is limited to vaccinated people and/or the fear of infection produces a virtual lockdown.

For now, though, markets continue to ignore any such risks including economic fundamentals.

Everything’s on autopilot now. If there’s reason for bulls to be concerned, it’s only that the algo factors have burned a lot of fuel simply holding stocks at their recent highs for roughly 5 weeks.