On Monday consumer discretionary stocks gained as investors decided risk was again “buyable.” The Consumer Discretionary Select Sector SPDR ETF (XLY) gained 2.25% on the day while the Consumer Staples Select Sector SPDR ETFdipped 0.31%.
Tuesday,April 5 reversed course with the Consumer Staples ETF up 0.09% and the Consumer Discretionary ETF down 2.34%.
Same with New York traded China stocks. On Monday Alibaba (BABA) gained 6.62% and JD.Com (JD) rose 7.14%, to take two examples. On Tuesday Alibaba fell 5.53% and JD dropped 3.78%. I guess the news about progress in talks to avoid delisting these big Chia stocks in New York wasn’t quite as positive on Tuesday as it was on Monday.
Or take the perplexing behavior of the CBOE S&P 500 Volatility Index (VIX), commonly known as the fear index. On Monday the index continued its (to me anyway) inexplicable drop, falling another 5.04% to 18.57 as investors and traders decided that there was no ned to hedge stocks despite the horrific news from Ukraine, and continued battles over natural gas supplies to Europe. On Tuesday, the VIX moved higher by 13.25% to 21.03 as investors and traders discovered “fear”again.
Good luck, though, on figuring out what option (Call or Put) and at what strike price to buy to play the next move in this index. On past track record, buying a Call Option on the VIX at 21.03 would be a smart way to profit from the next surge in market fear. But I’m finding it very hard to tell exactly what scares stocks these days.
Except a hawkish speech from a Federal Reserve governor, of course. Promising faster and quicker moves to raise interest rates, as Lael Brainard did on Tuesday, still seems a sure thing on moving stocks lower. Even, though, that speech just confirmed the current market consensus.
I’m not putting on any leveraged bets on market direction at the moment. The trend is just too “trendless.”