What is going on in the markets? Many people don’t really know yet and even more are unsure of what to project forward with market moves. Investors are going over a large swath of corporate earnings while also waiting for the weekly jobless claims data to see what their short term strategy should be.
Another issue that is being highly monitored by the big investors has to do with what has happened with GameStop, which has had a share of intense stock swings, along with theater chain AMC Entertainment through Reddit’s forum WallStreetBets. The new Treasury Secretary Janet Yellen is set to meet with the heads of the Securities and exchange Commission, Federal Reserve Board, Federal Reserve Bank of New York, and Commodity Futures Trading Commission in the near future to discuss this volatility.
That is a lot of data happening simultaneously but it appeared that stocks may have a good day on Thursday, with the S&P 500 posting gains for the last three days. However, some are saying we may be close to the peak including Michael Kramer of Mott Capital Management. Mr. Kramer believes that there is no more room to rise. He made this decision after the Cboe Volatility Index fell by more than 10% on Wednesday, and this index is closely watched as a measure of expected volatility in the stock market.
“It is stunning to me how quickly the VIX has fallen, given the lack of a move higher the S&P 500 has seen,” Mr. Kramer said. He noted that right before the election it was at 35.6 and fell to 23 within 10 days. This time around it fell from 37 to 23 in only six days. During the fall in November the S&P 500 rose more than 8%, but during the January drop in volatility the index only grew 3.3%. He chalked it up to, “Very different positioning in the market, I guess.” He followed up by saying that, “If the VIX is already at the bottom of the range, which as we have talked about in the past, is around 21 to 23, then the S&P 500 will not have enough energy to push it [to] new highs.”
On Wednesday the S&P 500 closed up by only 0.1% but Mr. Kramer noted that when you broke it down it was a poor day for the index and he raised some concerns. “It actually wasn’t a strong day at all because the index reached 3,848 at the high, officially closing the gap from last week, and essentially turned lower as it finished at 3,830.”