Signal du Jour - stay put
Overcast and no clear signal
Let’s start with the obvious. Markets have been dozing off since the beginning of June—so much so that we had to dig deep to come up with today’s Signal du Jour.
On one hand, we’re seeing a clear normalization in implied volatility. The market is getting comfortable with VIX sub-20 again. Equities have been drifting higher for weeks, and VIX hasn’t managed to lift its head—no help from catalysts either. Yesterday’s CPI came in broadly flat, reinforcing the idea that Trump’s (short-lived?) tariffs may not have had enough time to be as disruptive as initially feared. Another piece of the puzzle lands in thirty minutes with the latest US GDP print.
In the meantime, we had little appetite for yet another long volatility signal. Things can stay quiet far longer than most models care to admit. And while our JPM trade was leaning the right way, the pre-market gap down has eaten into last week’s gains—yet another reminder of how hard it is to fight the structural tide when you're long vol. Sure, a tighter delta hedge could have softened the blow—but those are the scars you earn playing this side of the game.
We could flag some setups on the short side, but the recent calm has thinned the herd. Most of what’s left leans on pre-earnings tension—think ADBE, ORCL—where the volatility surface is getting lifted ahead of expected prints.
But beyond that? Nothing stands out—not in the usual ETFs, and certainly not in the meme swamp. Of course, anyone’s free to read the tape differently. Or better yet, place one more bet that quiet will keep holding.
We won’t. How many times have we pushed for a few extra pennies, only to get smacked when the move finally hits? If you’ve been there too, take this as your cue to sit tight. Opportunities are on their way back—they’ve just been off enjoying the early summer lull. Maybe you should too.
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