The Money Morning Live traders summit in Chicago finished out two days of fun and fantastic education. I hope you got to tune in, if not, look for the replays because there are some truly insightful moments.
But here’s the thing I want you to understand. All of the traders agree, that capitulation, the moment where investors throw up their hands and stop trying to buy the dips, has simply not happened yet.
It was a recurring theme that we discussed quite a bit during the summit, and one you shouldn’t miss. The market remains vulnerable to more downside simply because people who bought after the pandemic broke, investors who have impressive gains on paper, are treating the market like its bitcoin circa 2013.
There is a persistent degree of volatility in the market, and it doesn’t look like it is going away any time soon.
Now high volatility is most often associated with downward trending prices. So there really isn’t any way of getting around it. Prices are more likely to fall than rise.
While we’re on the subject, I want to let you know that there is a new ETF in town. It is issued by Milliman, Inc. and it is a short VIX Futures ETF.
So you don’t have to open a futures account and short the VIX futures if you want to benefit from the VIX falling lower. Now you can just buy this ETF.
Think about that for a minute though. If the VIX is inversely correlated to the S&P 500, shouldn’t an inverse VIX fund be positively correlated with it?
Turns out that’s exactly what happens. So you might not want to buy SVIX when you could just buy SPY, but it makes for a great comparison chart.
What I did here is put SVIX in as the bars, and SPY in the background as black and white candles. What you see is that the inverted VIX index is holding flat, while the S&P continues to fall.
Option market makers seem to be saying that the SPY may make a little rebound here, but that the level of volatility will still remain high. Confirming what I’m telling you.
It ain’t over yet!
You’ll want to be certain to join with us on Monday morning for my first show.
May 20 2022