Small Cap stocks are enjoying another mini-melt-up this morning - on the back of no catalyst as usual - sending the Russell 2000 'VIX' to its lowest level in history.
Ironically this is happening as valuations for Small Caps test historical record highs...
As one trader noted tersely:
"Never been more expensive... and never been less perceived risk... what could go wrong?"
Authored by Lance Roberts via RealInvestmentAdvice.com,
More Volatility – Still No Movement
Last week, I discussed the issue of “lot’s of volatility with little movement” stating:
Over the last few years, as nervous investors worried about a market that has risen to record highs on trillions in central bank liquidity, and seeking some particular market product to which they could transfer their concerns and fears, ETFs quickly emerged as the current generations' "CDO" - the product that will accelerate the next crash when the BTFD mentality that has defined the market for the past 8 years, finally ends as central bankers pull the rug from under an entire generation of traders.
The last two weeks have seen the biggest increase in hedge fund bullish Russell 2000 positions since July 2008 pushing the net speculative long position for leveraged funds to a record high.
The reflexive combination of hedge fund shorts being squeezed and FOMC Drift pushed Small Caps higher early in the week, but notably since the cut-off data for CFTC reporting, Small Caps have dropped...
Every effort was made to stomp VIX to lift stocks ahead of The FOMC...