Last quote by Stacey Gilbert
Stacey Gilbert quotes
As much as the volatility has come in, they are still expensive on a historic level.
But a lot of that was heading into the 'Trump trade' here, if you will. The thought was, he could be very inflationary. We could have some concerns that the real rates are actually going to go negative, that everything is going to get crazier.
Yes, the market hasn't really moved a lot. But when we peel back that onion, a lot has been moving. If you look at, let's say, technology, for example, that's up almost 14 percent since Brexit. So what you'd seen post-Brexit really was a move to a risk-on type of trade.
You pick the sectors you like, you pick the stocks you like. And it becomes a market where you can add value when you're doing a little bit of research, not just saying, I'm going to buy the index, this is it and we're going to move up from here.
So net-net, you add them up together, and you're going to get that the S&P 500 feels range-bound, but when you pull it back, there are sectors that are certainly moving and outperforming ones over the others.
There is no real directional sentiment and investors seem to be less interested in the former big movers like Twitter, Tesla and Apple.
If you look at how the biotech sector has been under pressure for, let's say, the past month, you've also seen the probability that the Dems could sweep, increase during this period.
The big event, clearly, for the biotech space right now is the election.
Over the last eight quarters, it's moved around 18 percent and over the last 4 quarters around 26 percent. It's a known mover around earnings, and I would say the options market is suggesting that it could continue to be a big mover, even this quarter.
This is not a market to just buy the S&P 500 and expect it to be up on the year. In a lot of ways, those days are over. Now you have to be a lot more sophisticated in terms of picking your sectors, picking your stocks.
I know we're excited about this recent rally here, the recent outperformance of the financials, and part of that is because they are so hated.
I don't think these volatilities are pricing in these outlier Fed surprises.
I think where options are best utilized is around an event where you disagree with what the market is saying.
Any way you look at that, sentiment says that Apple could go higher.
This is real volatility in Apple again, which we should all be excited about, especially because it's to the upside.
I think what we've seen over the last six weeks isn't this change in the Fed – it went from a probability of 30 percent to be raising 25 basis points to somewhere around 50 percent; now, that's not a huge move.
We don't see any evidence that investors are moving to the ETFs or moving to the options, looking for anything that's going to rebound quickly.
Investors are more interested in protecting their gains so far.
Right now, the options market is really suggesting that we're going to likely take a breather here.
What we had happen with the British referendum last night was a known event, so it's come out of the market, this unknown that was being priced.
If it's a stay vote it's probably 5 to 6 percent on the upside just based on where those options are being priced.