Lead Stories

You’re not Warren Buffett: Why investors should watch out for fear and greed in the market
Martin Pelletier – Financial Post
Berkshire Hathaway held its annual meeting this past weekend and Warren Buffett doesn’t appear too worried about the U.S. economy or the equity market, which for many can be rather reassuring.
That said, it’s important to realize that most investors lack the capital and the patience afforded to Mr. Buffett.

Morgan Stanley Sees Yuan Selloff as SinoPac Barred: China Credit
Lilian Karunungan and Justina Lee – Bloomberg
Options traders are the most pessimistic on the offshore yuan in almost 10 months as the currency slides and Taiwan cracks down on derivative products.
The premium that investors pay for one-year contracts giving them the right to sell the yuan over options to buy advanced to 2.5 percentage point on April 25, the highest close since July 5, data compiled by Bloomberg show.

VIX Futures Speculators Add Bearish Bets
Zachary Storell – Investing.coom
VIX Futures Contracts: Large traders and speculators added to their overall bearish bets in the VIX futures market last week after a decline the previous week, according to the latest data from the Commodity Futures Trading Commission (CFTC) released on Friday.

Y-T-D Volume in 2014 – SPX Weeklys Up 37.6%; VIX Options Up 28.7%
Matt Moran – CBOE Options Hub
As shown in the charts below, key index products continue to have strong volume trends in 2014; here are the percentage changes for average daily volume in the period of Jan. through April 2014 over the figures for the entire year of 2013 –

VIX Short-Term Futures ETNs Present Rare Opportunities
Scott Murray – Seeking Alpha
This has been an interesting year in volatility. The past few years have rewarded the most simple of volatility strategies, selling volatility into U.S. political events and over-hyped European debt crises (see Cyprus, Portugal, Greece, etc.). Greece just came to the bond market last week, and it was SEVEN times oversubscribed at a yield of 4.95%. Apparently their “junk” rating is junk.

Videocast: Traders expect quiet VIX

More Choppiness Ahead? – Weekly Market Outlook 5.5.14
Price Headley – CBOE Options Hub
Technically speaking, the market made gains last week. What the bottom-line number doesn’t indicate, however, is how much of a struggle it was to even manage that modest advance. In fact, it looked like the bulls were out of gas by mid-day Friday, and were yielding to the bears again.


National Stock Exchange Files With SEC to Halt Operations
Sam Mamudi – Bloomberg
The National Stock Exchange, an equity trading venue with about 0.2 percent of U.S. volume, has filed with the Securities and Exchange Commission to cease operations on May 30, according to its website.

CME Group April ADV Rises 6 Percent, E-Mini Nasdaq-100 options Hit Record
The Options Insider
CME Group (CME) has reported that its April 2014 volume averaged 12.2 million contracts per day, up 6 percent compared with April 2013.  Total volume for the month was more than 256 million contracts; from this, 87 percent traded electronically.

Regulation and Enforcement

Wall Street Embraces a Rule It Hates
Peter Eavis – DealBook
Wall Street banks have a special loathing for a new and arcane rule, and they have gone to extraordinary lengths — like helping write a bill that is currently in Congress — to neuter it.
But in recent weeks, the banks have started to eagerly embrace exactly the sort of changes that the hated regulation demands of them, though it is not because they have suddenly come to believe in the rule.

Michael Lewis Finds A Fan Among Securities Regulators
Jon Shazar – DealBreaker
Attorney General Eric Schneiderman’s office is expected to send subpoenas within days to exchanges, one of the sources said on Thursday. The subpoenas will likely focus on how high frequency traders may receive information before other market participants.
Another source said major banks that operate dark pools, or platforms where trades take place out of sight of the rest of the market, have been sent letters asking for information….

SEC investigating Ocwen Financial
David Allison – Atlanta Business Chronicle
The New York Regional Office of the Securities and Exchange Commission has launched an investigation of Atlanta-based mortgage giant Ocwen Financial Corp.
Ocwen (NYSE: OCN), one of the largest mortgage companies in the United States, reported May 2 that the SEC is investigating the recent surrender of certain options to purchase common stock by the company’s executive chairman, William C. Erbey.


 A New VXX Low, and the Fear/Volatility Paradox
Investor fear has lifted, despite a drop in volatility
Adam Warner – Schaeffer’s Investment Research
Our long national iPath S&P 500 VIX Short-Term Futures ETN (VXX) nightmare has finally ended! At about 9:40 a.m. ET Friday, VXX hit its first all-time low since Jan 22. That was a streak of 71 trading days, good for the third-longest streak in the illustrious five-and-a-quarter- year history of VXX.
If you put that extended VXX un-performance in the context of a market that has gone nowhere, it’s probably the best stretch VXX has ever had.
Let me do some ‘splainin.’

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