NEW YORK ( Real Money) -- I don't have the spreadsheet skills to be able to back test stuff like this, but that has to be the fastest the VIX has ever gone from 30 to 12 in history; 30 is generally considered to be low-level panic, and 12 is considered to be elevator music.
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People were wetting their pants three weeks ago. These exact same people are saying "bull market, dude" today, like this whole correction never even happened.
What is going on?
A few things. The first is that, during the correction, there was a concerted effort by retail and professional investors alike to short volatility. It's a risky trade, but people have been conditioned to do it because selling volatility in a crisis is often easier and less scary than buying stocks is. You can look at the assets under management of the short-volatility funds, such as the VelocityShares Daily Inverse VIX ST ETN (XIV) . They exploded.
This is kind of hilarious, because owning volatility is supposed to be the hedge for long stocks. So if people are shorting volality in a crisis, it is the ultimate Texas hedge. There's nothing like being 100% long and then short your hedge for good measure. If this isn't a sign of speculative excess, I don't know what is.
Also, I did some research, and of any correction of this magnitude (9% or more) in the last 30 years; this is the only one that was a V-bottom. Put another way, V-bottoms generally don't exist when the market has to absorb large losses. It's an anomaly, and the primary reason I didn't cover my short.
St. Louis Federal Reserve President James Bullard did give the market a shove when he leaked the possibility of a fourth round of quantitative easing, but he changed his mind 150 handles later, and so I think any debate about whether the Fed cares about the stock market should be settled by now.