For all the talk about the auto bailout fiasco, a little more than two hours into the final trading session of the week finds the markets relatively unchanged since last Friday. As I type this the SPX is hovering around the 862 mark, down about 1.5% for the week.
Interestingly enough, the VIX has also fallen this week and is currently down about 4.4% from last week’s close. In fact, the VIX is setting up for the sixth close in a row of under 60 – the first time this has happened in over two months.
Shorts had an hour or two of fun yesterday, but the buy on the dip crowd appears to be back out in full force today, with technology, small caps, real estate and homebuilders catching a bid.
As long as the VIX keeps dropping, it is reasonable to assume that buyers will continue to step in aggressively to support the market when it pulls back.
At the very least, expect bears to start to lose their nerve if the current pattern continues.