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Why VIX Needs Amazon, Mastercard to Get Moving

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Until they do, the index will have a tough time getting back into panic mode.

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I know in the eyes of many, a VIX in the low 20s doesn't represent as much fear as some would like. After all, last time Greece looked this vulnerable was when ancient investment bank Goldmanicus Sachsius concocted some off-balance-sheet derivatives to finance the Parthenon.

But it's pretty in-line with actual SPX volatility. In fact, if the present trend continues, it's overpriced. Tuesday's pathetic range, if repeated, would translate to about a 10 VIX.

And remember, index volatility depends on both the volatility of the component stocks, and the degree to which they correlate to one another. But correlation becomes decreasingly relevant when the components are just not moving. And that's a bit of what's happening in many spots now.





Take these two above -- Amazon (AMZN) and Mastercard (MA). Since dipping around earnings, Amazon hasn't budged from the 115-120 range. In fact it's ticked at $118 at some point in all but two days in February. Similar story in Mastercard and the 225 magnet. Cramer may even call a 225 pin, even though there's no strike.

How about Google (GOOG)? It's printed in the 530s every session since January 22.

Now there are spots that are moving. Mining/resource sorts of stocks got hit more than most, and have also bounced back faster than most. But there's a boatload of churning names like these, and until they get moving, the VIX will have a tough time getting back into panic mode.
No positions in stocks mentioned.
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