SPX has an expected move of about 110 points heading into the week of May 11. The expected move has continued to hover around the same amount for a few weeks in a row now, but the actual moves have surpassed this expectation more often than not lately.

We are experiencing an inefficient market, where the realized volatility has far exceeded the implied volatility. This is especially true for the Nasdaw, which has had multiple 2-3 standard deviation moves, but it also holds true for SPX which also keeps breaching the upper end of the expected move.

Major indexes, ETFs and even individual stocks have gone nearly vertical over the past 6 weeks or so with no end in sight. Eventually what goes up must come down, and as always, it’s a matter of when not if. This madness can certainly continue for a long time though.

The upper end of the expected move sits around 7509, breaking yet another historic milestone on SPX should we get there. 7500 is certainly within the expectation, and if the crazy upside breaches continue, we could just blow past this like we did the previous psychological levels.

The lower end of the expected move is around 7288, which takes us back to just about Wednesdays open. Another week with a crazy upside bias where the lower end only takes us back a couple of days, but the upper end blows right past major milestones and key levels.

VIX continues to hold onto the 17 level, with just a few wicks breaking below. We are seeing a similar correlation between VIX and SPX that we saw earlier in the year where both are rising together. Historically, this has always been bad for SPX. In the past, we have seen this sort of price action result in a swift 5-10% pullback. Whether this time is different or not remains to be seen, but something to keep in mind as both are showing strength together.

In the case of VIX, perhaps strength isn’t the right word but maybe resilience is. VIX hasn’t been popping to the upside, but it’s been hanging steady and has been green a lot on days where SPX is also green.

At the very least, it’s kind of stalled out and is not collapsing towards the lower end of the grey box like you would normally expect in a bull market.

By definition this might be a bull market, but it more so feels like a crash to the upside. We have seen a near 20% move in SPX, and a 28% move in the Nasdaq in just 6 weeks. If there was a negative sign in front of those figures, we would say it’s a crash. The same logic should be applied to the upside as well.

A 20-30% move in an index in 6 weeks is not healthy, regardless of the direction.

The market is on a sugar high and is experiencing euphoria. All news is good news and every dip, no matter how small, is a dip that needs to be bought. We are in full blown FOMO mode and that can carry us another 10% or more.

As I said the other day, either go long or sit out. I think those are the only options. Trying to short this thing likely won’t end well in the short run unless you have the capital to maintain the position.

Good luck!