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SurlyTrader is a portfolio manager at a large financial institution who specializes in trading derivatives. He has been in the financial services industry for over a decade and would like to share his experience and enthusiasm in the financial markets with those who have a natural curiosity and... More
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  • Trend Broken - Now What? 0 comments
    Apr 17, 2013 9:50 PM | about stocks: SPY, VXX, VXZ

    Yesterday's bounce might have been a relief for the bulls, but today's swoon most likely re-ignited some ulcers. The S&P 500 has broken its upward trendline with convection and had a minor bounce off of the 50 day moving average:

    (click to enlarge)Lookout Below?

    On top of the ugly trading, we are starting to see a shift in investment banking sentiment with some calling for significant declines ahead:

    (click to enlarge)Equities and oil were again weak today, but the more interesting question is just how volatile everything is going to get. My feeling is that the magnitude of the move in gold might just be a foreshadowing of the volatility we could see in the coming weeks and months. The realized volatility in 2012 averaged out to about 12%, but let us not lose sight of the volatility we can see in mildly volatile years. In the past few days the rolling 1 month realized has jumped from 7.5% to 15%, but could it go to the 50%+ that we saw in 2011?

    (click to enlarge)I certainly wouldn't bet against it.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: Market Outlook Stocks: SPY, VXX, VXZ
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