The market is currently showing few signs of acute anxiety, with implied volatility on the decline and the cost of downside protection near yearly lows. This suggests a reduced expectation of near-term volatility, as positive gamma continues to constrain market movements. The tech sector, despite recent declines, has not exhibited significant panic, with only marginal increases in the cost of out-of-the-money puts on the XLK ETF. Strong earnings from companies like ASML have further bolstered confidence, counteracting potential negative market movements.
The VIX, a key measure of market volatility, has risen slightly but remains well below levels seen during previous market stress events, such as the Bank of Japan's rate hike in August or the Federal Reserve's rate cut in December. As of 08:51 on January 29, the VIX stands at 16.87, up from its last close of 16.41, yet still far from its 52-week high of 35.05. This indicates that, despite some fluctuations, the market's internal dynamics do not currently signal a broader sell-off.