This post was just published on ZYX Buy Change Alert.
Our models expect higher volatility going ahead. The down draft in the market today is an indication of what may come. The best way to protect against volatility is to buy volatility. This is the reason for a long position in VXX. If there is a quick 10% correction in the market, VIX may double.
Having said the foregoing, over the last 10 days, some large traders have been heavy sellers of volatility. So far they have been right. However it is important to note that the volatility is already near an all time low. … Please click here or the title below to read more.
(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
Spanish and Italian yields spike as Lagarde gets tough. Lagarde, the head of IMF, has stated that she opposes any extension of Greece to pay its debt. There are significant jitters in Europe this morning. Expiration of certain futures have exasperated the downside.
Normally at a time of crisis, the dollar gets stronger. Perversely, dollar has shown significant weakness on rumors that the Fed has taken June rate increase off the table.