We got a 1.5%-ish rally this afternoon. After a sloppy start in the morning, by about 1:45 PM or so, stocks were going up with no looking back. Not that it was all gravy; some of the biggest stocks out there are down big-time for the past five days.
In fact, I’ve got to be honest with you, this whole rally is probably doomed. No legs. One big, red, flashing signal: Volatility is still extremely high right now, with the VIX having topped 24.5 at one point today.
In fact, volatility is in backwardation right now - more expensive the further out you go. More on that in a minute.
High volatility in a rally is a sign that you shouldn’t trust the “bounce.” Like, at all.
In fact, one of the biggest opportunities right now is to sell rallies. Sell, sell, sell. Here’s what I’m seeing right now…