VIX Falls To Lowest Level Since May 2008

The market is higher again in early trading, and I've lost count of how many up days in a row this has been. I think the SPY has been up for 14 straight days, which is quite a feat. My guess is that portfolio managers are starting to feel some performance anxiety ahead of the end of Q1 when they have to show performance. This is likely causing them to use every small dip to put money to work and avoid being left behind by a stampeding market.

There has not been a lot of newsflow in the market, but yesterday the Fed said it would keep rates exceptionally low for an extended period. This news was greeted with buying overseas, as Asian markets rose overnight, led by China. The Bank of Japan also kept rates low, and stepped up its short-term lending plan from 10 trillion Yen to 20 trillion Yen in an attempt to keep the Yen from rising.

In economic news, producer prices fell more than expected last month (-0.6%), supporting the notion that inflation pressures remain subdued.

The 10-year yield is down a bit to 3.65%; and the VIX is falling -6.1% today to a new yearly low, and its lowest level since May 2008. The chart below shows how long it has been since we saw the VIX is such low levels. It's hard to tell, but if you look at the lower half of the chart, it shows the price action of the S&P 500, and what is interesting is that May 2008 marked a high in the market that we have yet to retrace. I'm just saying.

Trading comment: I raised a little cash yesterday, and will use today's strength to take some more partial profits on things that have run. I still feel the market is too extended, the ISE call/put is flashing too much complacency, and that the market is vulnerable to at least a short-term pullback. But I remain bullish for the intermediate-term.