What is up with the markets?
A lot of things have been going on in the world, turmoil in the middle-east, Japan's radiation leak, a severely over valued Euro and the markets show no sign of fear (VIX), rather a smooth recovery, in fact the VIX hasn't traded so low in a long time. The Dow Jones Industrial Average seems to be trading sideways now, so it's hard to be bullish on anything, is there a global collapse in the near future? Or are we going to continue to see positive numbers? One of the main reasons is, despite all the negative news that has been going lately in the world, is that companies are hiring again and the people that filed for unemployment dropped, making the unemployment rate drop a nice 0.1%.
Will this be enough? Obviously, collapsing governments and rebellions against the existing governments in the middle east doesn't seem to affect the global markets and economy. To me, this can only mean one of two things either;
A: Once the markets settle down (how it's trading sideways right now) the anxiety will kick into a lot of investors, wondering why the markets aren't pulling back as much as they show 'under normal circumstances' which will make the market move lower and pressure will build on the VIX and the markets,
or B: Trouble in the middle-east is viewed as 'nothing new' and the global economic recovery will steadily continue.
Regardless, the VIX trading at these low levels under the current economic situation is quite baffling to me.
This week I'm keeping a close eye on and being bearish or bullish on;
- VIX (VXX) ▲ is bound to trade higher by the end of the week. Target at 19.
- FXE ▼ The overheating Euro is bad for the European economy and intervention is highly likely. Target set at 1.400.
- SPY ▼ for May @ 130 Put
- QQQ ▼ for April @58 Put
- DIA ▼ for Arpil @ 120 Put