When Words Fail Me

There is always an abundance of stupid stuff going on at big market tops. This one is a stunner:

The VIX is a sentiment indicator that shows the implied volatility ahead. Low volatility is associated with rising markets and high volatility happens in crashing periods.

This chart displays the biggest speculative bet ever that the market will be stable, that is to say, gently rise, giving investors a super comfortable ride. This is an extremely crowded trade, which means that, with few if any speculators taking the other side, the market is primed for a very big crash. Now stare at the VIX itself:

The insanity of this situation is that the first chart is telling us that there is an unprecedented bet that the market will go up, causing the VIX to go down. This while all market metrics are screaming crash dead ahead. Note what happened from 2007 to 2009. Being short back then was disastrous and, this is the part that should interest anyone who owns stocks today: unwinding this short position puts enormous pressure on the stock market proper, making a bad thing horrific for anyone owning stocks or stock mutual funds.

Pretty dumb, don’t you think? Believe me, I’ve seen this before. It’s gonna be awful when it happens, and I don’t think it will be much longer.

One more thing: It should be clear to all by now that the United States of America is now a kakistocracy. I cannot imagine that this is bullish.

Cheers,

Rod

 

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