On Friday, the VIX closed the bullish window dating from early-December, paving the way for new gains in the S&P Index. Elimination of support in the VIX at 12.08 leaves some accounts over-hedged for the prospect for a back up in the S&P 500. This should lead to some more aggressive equity buying today and later this week.
Risk is still extremely high and I still believe there could be an event before the end of the year that torpedoes the market. For right now we are due to back and fill. Like March 2011, a decent move commenced but it lasted about 6 weeks. We are coming to the second half of July, its vacation time for the markets. Nothing too drastic should happen here as August is just about the slowest month of the year. But once September gets here my antenna will be out.
At the end of the day explosions like these end up having geopolitical implications. While it may not be tomorrow or next month, I believe that if Greece leaves the EU they will be tempted by Putin who must be standing by and laughing at all this.
We could have a new all-time high in the Nasdaq as soon as tomorrow. I don’t put the same weight about all-time closing highs that some technicians do but the highlight of the week was the closing high for the Nasdaq.