The market's cautious optimism is reflected in the decline of the VIX, which has dropped to 14.86. Despite this, the VVIX Index remains elevated, indicating that traders are still hedging against potential tail-risk events. This suggests a persistent demand for volatility protection, even as the S&P 500 faces resistance around the 6,100 mark due to significant option positioning. The mechanical nature of recent market movements, influenced by risk parity and CTA funds, highlights the lack of bullish catalysts and the uncertainty surrounding the new Trump administration. These factors contribute to a tactical range in equities as the market anticipates the fourth-quarter earnings season and the upcoming January FOMC results.
The ProShares Trust Ultra VIX Short Term Futures ETF (UVXY) experienced a decline, falling 1.78% to $18.19 at 15:40 on Thursday, January 23.