$VIX Spikes to 22.7, $SPX Starts Reacting to Downside (Charts) - Updated

In the past month, the $VIX is up 50% and the S&P 500 is down only 0.95%. The S&P fell 1.10% today on worries that Congress won't pass a bill in time to avert the fiscal cliff (automatic tax hikes and spending cuts). It also broke through the 50 day moving average. The fund that bought 25,000 VIX January $20 calls on December 12 is now in the money it looks like. The House and Senate will probably come up with a deal to lighten the blow on the economy, but it could be forced by market volatility. *Also, Treasury Secretary Tim Geithner told Congress on December 26 "that the statutory debt limit will be reached on December 31, 2012." Finally some fresh implied volatility.

Charts courtesy of stockcharts.com.


Jeff Gundlach Sees Downside Risk For U.S. Stocks, Likes Japanese Stocks Into 2013 (Bloomberg TV, 12/18/2012) *He says fiscal cliff or not, tackling a fiscal crisis is a risk for the economy and stocks.
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