Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Why VIX Needs Amazon, Mastercard to Get Moving


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

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.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos