Defense pays off with volatility arriving on cue By Almanac Trader | August 17, 2017
Right on seasonal cue we are once again witnessing a pickup in market volatility. Today alone the CBOE Volatility index (VIX) jumped over 30% to close over 15. After reaching historic lows as recently as late July, we could likely see larger than usual spikes in the coming weeks to months. Fresh struggles for the Trump Administration combined with heightened tensions on the geopolitical stage, and domestically, are throwing a wrench in all the goldilocks economic outlooks.
Based upon the following weekly bar chart of the VIX with its corresponding seasonal pattern displayed in the lower pane of the chart above, market volatility is likely to continue to escalate at least until sometime in early October. Last year, Presidential Election uncertainties keep the VIX elevated well into November.
Ever since issuing our Seasonal MACD Sell Signal for DJIA and S&P 500 in May and in June for NASDAQ we have been taking steps to prepare for a stretch of market volatility and market weakness in the Almanac Investor Stock and ETF Portfolios. We missed some market upside by exiting in May/June, but we are already beginning to see the benefits of taking defensive moves then.
Many of our recently established short stock positions are performing well while gold, silver and bond related positions in the ETF portfolio are also performing as anticipated. We believe the portfolios remain well-positioned to weather market volatility and expect to maintain the current posture until our Seasonal MACD Buy Signal confirms when it is safe to be more aggressive sometime after October 1.
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