US Equities took a cue from events in Asia this week as the bulls murdered the bears in a very public show. The market is on a post-election tear not seem since LBJ took office, with the benchmark S&P 500 + 1.5% on the week and over 5% YTD.

We observed some very extreme and unusual price movement in options trading this week which might have indicated a blow off to this parabolic move. Upon further DNA testing, it was revealed the unusual activity could be attributed to a once highly-regarded market mutual fund, HFXIX which blew up, losing 15% of its value or about $600 million this week.

HFXIX, is a mutual fund based on a hedge fund type option strategy on the S&P 500 (SPY). Their blow-up highlights the danger of unlimited exposure when selling options and the importance of understanding those risks. Occasionally, even a baby black swan can wipe out years or decades of work. The question remains what the unusual options activity this week means. Often, capitulation events like HFXIX occur near critical inflection points.

This drop was on top of a dismal December when HFXIX lost over -10%. HFXIX positions itself to be non-correlated to stock market returns, which considering this week’s action is quite true. The low risk, low volatility, capital preservation part of its stated profile, well, not so much.

As if events can’t get much more bizarre regarding the world stage, it was capped off this week when Kim-Jong-Nam the half-brother of North Korea Supreme Leader was publicly murdered in a Malaysian airport. The murder was carried out by two women who allegedly thought they were performing a gag rather than an assassination.

Malaysia has refused to return the body of Kim-Jong-Nam to North Korea. until DNA samples are obtained so it can conclude its reports on what happened.China, under pressure to reign in its proxy has suspended all imports of coal from North Korea. Maybe some positive fallout?

Getting back to the market action, besides the wacky action in volatility (more on this in the video) the weekly trading volume for the key equity indexes remains quite low even while there has been a pickup in accumulation days. Health care and the Biotech sector picked up needed steam. Another interesting development is that emerging markets (EEM) is sitting at its 200-week moving average for the first time since May 2015. Silver is flirting with its 200-week moving average as well and if things continue its all pointing to a bull run for commodities and those dependent raw materials for income.

Video length: 00:12:10