Markets are on week 6 of a year 2000 like advance and the market’s last day resembling a down day was November 4. Positive seasonality to boot the case seems closed: Bears are dead.
Yet in an environment of pre canned market prices a new feature has quietly been emerging and it is telling a story in a highly unconventional manner: Backwards.
Let me introduce you to the curious case of Benjamin $VXX.
Recall that Benjamin was once strong but, contango stricken, quickly deteriorated to be the worst performing asset class known to man as the $SPX leaped with joy from QE program to QE program:
The end right? No so fast. Something odd has been occurring since the July highs. As markets accelerated to ever new highs little Benjamin has stopped shrinking:
Even this massive rally off of the October lows into record highs has failed to break Benjamin’s back. Curious no?
One may rightfully ask if this entire rally has not been a 2 way trap: Trap shorts below at first and now setting up underinvested longs to be trapped as they chase ever higher prices.
In this context I highlight again the $NDX chart as its touch of the upper trend line and subsequent rejection on weakening internals suggests something is not quite adding up here:
But hey in lieu of any down days all seems fine. Rally on as you please, but Benjamin is in training it seems. For what we have to wait and see….