the Contrary Thinker Strategy & Tactics

When you look at recent market activity since the low posted on March 30th by the S&P and the other major averages, the day-to-day action has been uncorrelated at best. Even in the face of rising commodity indexes, the stock market has continued to advance, and there is no fear being shown by the VIX.

The rationalizations continue to spin bullish — what they call optimism that oil prices don't matter like they did back in the seventies. The fact still remains that in 2026 commodity prices are up 46% just since the beginning of the year, and they're sticking, consolidating at higher prices. These numbers have yet to be reflected in the economic data that will be reported this week, next week, and in the months ahead. As our chart demonstrates, the Goldman Sachs Commodity Index, while consolidating recent gains, is in an uptrend — and that near-50% gain in commodity prices is being held. Now, if you want to say that's bullish and that the market doesn't care about inflation, we'll see how the market reacts when the inflation numbers start coming out.

And that's what the market loves: the hyperbole, the buildup, the anticipation — better than sex, eh? And then the overreaction, the fast-moving action, with the insiders all set up and ready for it. Some things just never change.

But our key question is the trend — the major trend. When will the attitude of the market change from this positive spin that everything is beautiful, to the realization that the context has changed?

So, the market's not scared. Apparently, AI and high tech will be such a productivity-increasing mechanism that it totally outweighs commodity-based inflation. Not to worry about the parallels to the post-World War I deflation — caused by the overproduction of goods no longer focused on military equipment, which overwhelmed consumer demand, drove the economy into depression, and led to the stock market crash of 1929.

And I'm not a pessimist, but what about all those people who are going to lose their jobs because AI is going to replace them? Now we have the combination of overproduction of goods and services via AI and robotics, alongside consumers who can't afford to buy them because they don't have jobs.

What Is the VIX Actually Measuring?

It's certainly clear the market is not scared. Based on implied volatility, the VIX is showing no fear at all. But what is it supposed to measure, really?

As noted previously, the stock market seems to be leading implied volatility. The S&P made its initial high on January 28th and had been going down for several weeks before implied volatility made its V-shaped bottom on February 27th — which was war-related. Afterwards, it spiked higher.

So the VIX is now the bellwether of geopolitical events?