S&P 500

After two violently volatile days in which the market soared (Monday) then promptly retraced all gains (Tuesday), the overnight session has been relatively calm with futures and oil both unchanged even as the BBG dollar index rose to the highest level since April 4. This took place despite a substantial amount of macro data from both Japan, where the GDP came well above the expected 0.3%, instead printing 1.7% annualized, which pushed stocks lower as it meant the probability of more BOJ interventions or a delay of the sales tax hike both dropped.

Having pointed out the gathering storm in VIX ETPs, raised concerns of a "reasonably high probability" of a large drop in stocks, and explained how complacently short-term risk is being priced, Goldman's portfolio strategy team have unleashed a dramatic warning. Shifting to an oveweight cash position for the next 3 months, Goldman warns "we downgrade equities to Neutral over 12 months on growth and valuation concerns. Until we see sustained earnings growth, equities do not look attractive, especially on a risk-adjusted basis."

Over the past month, the topic of "someone" or "someones" rushing to allocate capital toward expectations of a future volatility surge using such volatility derivatives as VXX, has surfaced on several occasions. The first time was three weeks ago when Tom McClellan pointed out that "VIX futures ETF extremely popular now. Can this possibly end well"...

... when he pointed out something that on the surface was counterintuitive, using his post from February 18 when the market has just reached its most recent selloff bottom:

Gold Goes From "Ultimate Bubble" To Ultimate Buy For Soros

George Soros, who once called gold “the ultimate bubble,” has resumed buying the gold ETF and shares after a three-year hiatus.

Soros Gets Gold Badly Wrong In 2010 – Gold in USD (2009 to 2012)

Submitted by Lance Roberts via RealInvestmentAdvice.com,

Last Friday the market closed below its 50-day moving average. Theoretically, such a close should have sent traders scrambling for cover Monday morning. As I noted in this past weekend’s missive: