Something is Brewing
Welcome to the world of nonchalance. The Greeks are having issues with debt and they cut 15,000 employees. That is bad? I guess those Greek passport officials will only get 2 months of paid vacation per year. Perish the thought! Either way, as I have articulated here in the Aqumin Newsletter, Euro issues have subsided as a main catalyst for market activity. They are there but more like a cold sore now and not a big infection. Look at the dispersion of activity today.
I have below the IV30-HV60 AlphaVision™ Volatility Landscape. The building height is 1 week total return. This gives a view of trend. Trade generation is usually about identifying trend which is why I like 1 week change activity. The skinny, tall building you see in GMCR. A positive earnings report no doubt generated a big short covering rally (GMCR has about 21% of Float short) so maybe a few hedge funds are starting to get nervous. The red color indicates that IV30 (30 Day Implied Volatility) is trading at a 10 pt.+ discount to HV30 (30 Day Historical Volatility). GMCR is trading at a 72 pt. discount. That is a little skewed from the big move up but this name still has some oomph in it.
Also note the group of Money Center banks enjoying the same implied volatility discounts. JPM, C, MS and BK all are trading at levels like the financial crisis is receding. To me that is just a reason to buy juice. For GMCR, a former darling of the momentum set, history can repeat as they drive this name higher. Combined with the large short interest I would not stand in the way. With the public just barely in the market, the old go go growth names can really start to do some damage on the upside if John Q gets back in the action. GMCR is a name to watch for any kind of long gamma position out to March. Safer money is buying premium (basically just calls) in the big banks. Either way market volatility is starting to look attractive because stocks are moving up as fast as they were moving down. Look at all this action without any public participation. Imagine what happens when the folks get that quarterly statement from their T-bills. The shorts, as they say, could feel the squeeze. Watch the big momentum names as the damn will generally burst there first.
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