Volatility Firming as the Spooz Struggles Near All-Time Highs


U.S. equities have been stuck in a sideways grind right at the all-time highs in the S&P 500 this week. As close as we may be to that elusive 1565.15, the market is flashing many warning signs that may make any recapturing of the U.S. equity market holy grail a moot point. The headlines out of Cyprus are forcing markets to stay focused on systematic risk in the Euro-zone banking system, with the Euro posting a substantial 200+ pip reversal during Monday’s trade and further downside today. At the same time we have seen the U.S. Treasury complex post rally modestly over the last two weeks with the 30-Year future posting a 3.5 point gain. On top of this, the VIX has been oh-so-gradually getting a bid since the 15th of March, rising from 11.4 up to today’s close of 13.15. That may not seem like much, but taken together with what I observe in bonds and the Euro, it’s not something I want to be seeing if I am long U.S. large cap equities near all-time market highs.

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