There's a sick act on this years America's Got Talent. The guy takes just about anything: razor blades, light bulbs, coins and swallows them. He then spits them back up in any order he chooses, sometimes manipulating the items in his stomach before bringing them back to the surface. It's a sick act. Nauseating. But at the same time you can't look away. It's a one of a kind act, riveting and unbelievable. Kind of like the market we trade today.
Look no further than the financial news media to find our first instance of regurgitation. They've been spitting out the same headwinds, the same scare tactics, the same "Why Stocks Will Crash" articles since the market bottomed in 2009. They swallow all the key frightening terms, attach a country to it or economic data, and spit it out into a well written article. Market crash headlines sell and are much more clickable than "Stocks to remain range bound for 8 months".
How about some of the mind boggling moves in the option market in 2015. There are times when the market makes some unbelievable moves. $GOOGL option soaring 10,000% post earnings and turning some $.10 options into $102 options. I've seen that about as often as I've seen someone swallow a razor blade and then spit it back up without a hint of injury. Amazing.
We've had those nauseating reversals. The ones that we know have been happening since the lows in March 2009, but we think there's a chance that this time the market won't recover. Even last week at the peak of the China Currency drama, stocks reversed course in stunning fashion leaving those short the market with an unsettled feeling in their stomachs.
While the VIX isn't showing the daily gyrations, the market is moving. A day like today is a perfect example. Stocks started lower, moved higher, moved lower, moved higher, and closed off the lows. If you were trading the gyrations to perfection, it was a wonderful session. If you went simply long or short - there's a good chance you were at least modestly frustrated by the days action.
The market has been able to handle whatever ends up on its plate. It's swallowed Greece, China, Ukraine and every other headwind, and spit them back up like nothing ever happened.
It's 2015 - the great consolidation - the great regurgitation --- we remain in a market able to take anything that heads its way and spit it back out. Support remains strong. Buyers at the ready for any dip that comes their way.
At some point the market will get thrown something that's far too big for it to handle. Way too big to swallow. And when that time comes, we just may witness our first correction in quite a long time.