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The market was relatively stable all day until the final 30 minutes. This has become a pattern recently, that is, there is a sharp sell off and quick pickup in volatility during the last 30 minutes of trading. Rumour is that there is a big institution holding a vast amount of forward contracts in VIX and that institution is trying to manipulate the volatility in the market. Although I don’t know how much credibility should be given to the rumour, it does reflect overall nervousness among investors.
News on the economic front this morning was mostly positive. There is no inflation showing in PPI numbers. Tomorrow we are going to get CPI numbers, which will be more important. Oil price rebounded by almost $3 a barrel and tomorrow we are going to get the weekly inventory data. Right now the market is expecting a small withdrawal. However, due to the backwagon of the future prices, it is quite possible we are going to get a bigger withdrawal number and this certainly will add additional pressure to its price.
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