Tuesday, February 19, 2013

VIX & Volume (Excerpt)

The VIX of both the S&P 500 and NASDAQ 100 are the lowest they have been since the start of the current bull market. The former is the lowest since the spring of 2007, while the latter is the lowest since the summer of 2005. Those were both good times to buy stocks as long as you sold them right at the market top during October 2007.

On the other hand, NYSE volume was much greater back then than it is now. The bears are warning that this combination of low volatility and volume is bearish. There is too much complacency and not enough trading to confirm the bullish trend of the market.

Maybe so. However, low volatility, low volume, and relatively low valuations all support my view that the bull market has been mostly driven by cash-rich corporations through buybacks, dividends, and now M&A.

Today's Morning Briefing: A Walk in the Park. (1) FDR’s investment strategy. (2) A depressing headline with an upbeat twist. (3) Volatility:1930s or 1990s? (4) Low VIX, volume, and valuation. (5) 2003-2007 again? (6) Earnings boost buybacks, which boost EPS. (7) Virtuous and vicious spirals. (8) The bright side of revenues & earnings. (9) G20 group hug in Moscow. (10) Easy money is still the only solution to all the problems. (More for subscribers.)

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