Volatility is Back
Volatility is back. We have been mainly bullish since April of last year, however, things are seemingly turning gloomy again. Market sentiments have broken down to bearish territory and the volatility index VIX is indicating that investors are getting fearful. Somehow this rally did not feel “right” in the first place but our clients were still able to capitalize on it.
Before the trend bent recently, we exited the market on April 27 (subscriber content), on time to protect client money. Year-to-date Dynamic System is beating the benchmark with a +9.24% return, compared to a loss of -0.16% in the SPY (S&P 500).
Chances are high that the sell-off last Thursday was a trigger to put an end to climbing a wall of worry. Whether it was a computer glitch or not, it definitely was a reason to awaken the long-term buy and hold folks, and get them back to reality.
The bullish scenario we envisioned roughly two months ago is put on hold, as the index smashed through the 200 EMA like a hot knife through butter. We will therefore stay on the sidelines and observe the market closely for a new entry. Be there when Dynamic System gives a signal.