One Way Or Another

The New Year will arrive!

Music fans of a certain age will have an opinion about Debbie Harry and her band, Blondie. They straddled the New Wave movement while bringing an element of punk rock to their music. Not everyone’s cup of tea, though I felt they threaded the needle quite nicely. Either way, give Debbie credit for taking her experience with an ex-boyfriend stalker and turning it into one of the band’s biggest hits. One Way Or Another came to mind as we commence the final trading day of 2025 and contemplate what 2026 may bring. Will we finish on a high note or stumble across the finish line? Dunno, but we will turn the page one way or another.

Yesterday was a third down day in a row for SPX. Over on X/Twitter, my friend QuiteMidLife pointed out that the index has posted small losses on the last trading day for each of 2021 through 2024. More trivia than statistical significance but I still accused him of being a Debbie Downer 😉.

Yesterday was also a third lower close for our VIX Mix composite, though it is still hanging out in firmly bullish territory.

13 of 17 components are also bullish and there are no bearish indicators to be found. We’ve now had seven consecutive green bars. For historical context, the VIX Mix finished 2024 at a bearish 30%; 2023 at 72%; 2022 at 51% and 2021 at 73%.

As we’ve noted recently, we are heading into the New Year with a bullish-looking VIX futures term structure. The chart below shows where we sit in the pre-market. Spot VIX a touch higher, but the futures stable and in relatively steep contango, showing a good five points between Jan and Aug.

This configuration has created downward pressure on VX30 (constant 30-day maturity VIX futures) since the last spike in November.

And that downward pressure has been a tailwind for the short volatility trade expressed as a long position in SVIX. As shown below, SPX is up 5.47% from its November low. But SVIX has crushed that return - up more than 46% over the same timeframe. Can’t catch the bottom?? I would agree while suggesting that you might have a position in SVIX that is up between 20% and 30% in this window. 😉

That’s it for this morning. Back to work on “Vixology 2025” that we’ll likely roll out to you over the coming weekend. In the meantime, best wishes for a Happy New Year!

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