End of the month!

Volatility is back! Its the end of the month and DIA is down (5.25%) for January. A couple things that are making me believe there is a bigger correction on the horizon, more than we've already seen. The SPY is down a measly 3.5% for the year. This is the first time in over a year that the SPY has closed below the previous months open. In the last few days, aggressive rallies have been met with aggressive selling. Today the ES rallied 27 handles off earlier morning lows but the VX futures never went negative on the day. The VIX closed at 18.41, the highest monthly close since 2012. The VX futures are in backwardation. Feb VX futures closed higher than march, april, and equal to may. AMZN which has been a bulls wet dream was down over (10%) today on the back of bad earnings. AAPL is also down (10%) since earnings. To be fair, stocks that reacted well to their earnings were FB,NFLX,WYNN,CMG, and GOOG. But some of the stocks that never saw a downtick in 2013 are starting to crack and as i've mention before I believe this is a warning sign. Im long Silver and Coffee, Silver is stuck in the mud and can't seem to go either way, it's down (1.2%) YTD, but coffee is working nicely up 13.4%. You can see my reasons for coffee here. Coffee So far this year has been great with higher volatility and two way markets. Lets keep it up!

Natural gas had rallied as much as 60% since early november, with the last 30% coming in 12 days.On 1/27 Nat gas reversed nearly 10%. This made me believe this would be a top, at least temporarily. I sold OTM calls on the future because implied volatility was extremely high, the extreme move in such a short period of time, and the reversal bar. I did take some heat but the volatility came in nice the other day after selling off 10%.