I’m very aware I sound like a perma bear at times, especially with my fixation on the VIX.
But it’s not like me.
I’m a very optimistic kind of guy.
That’s why, in my latest Bank It or Tank It video, I break down 5 stocks that are on my Bank It list today.
This doesn’t mean I’m outright bullish either.
I’m still bearish, and what I’ll share with you and what I Tweeted about earlier today, should make you bearish as well.
That’s why in every trade I make, I know exactly what to expect if things are going right, and what is a sign things are going in the wrong direction.
And it all starts with my Bank It or Tank It analysis.
In today’s video, I cover five stocks that for varying reasons ended up on my Bank It list. I did that intentionally.
For one, to prove I’m not a perma bear. But, I also wanted to show you that there are plenty of opportunities and stocks holding up so far in this volatile market.
They may not hold up forever. Which is why we have our key levels and analysis to track along the way.
To see the five stocks I’m banking on today, just click below to watch my latest video…
VIX is Acting Strange
The CBOE Volatility Index (VIX) is widely known as the Fear Index.
It gets that name because the index moves higher as the market moves lower, generally speaking.
Well, today, the S&P 500 jumped over 1%.
You would have thought the VIX would have sunk lower as a result. That’s what I was expecting.
Instead, it did the opposite.
The VIX was up 5% to 24.
Who saw that coming?
It is very strange, but, if you understand how the VIX works, it tells us something big is likely about to happen.
Volatility is Flashing Warning Signs
The VIX is simply a measure of price changes on the S&P 500 Index options. It uses the volatility in the options market to get a sense of expected volatility over the next 30-days for the actual S&P 500.
This means, as the VIX rises, traders are making bigger speculations in the market, usually on the put option side.
That’s why the value rises when markets fall. Investors scramble to buy up put options as protection to a further crash.
Seeing the VIX rise on a strong move higher in the broad markets isn’t a good sign.
The big money is staying bearish. Using this rally as a chance to hedge against more volatility to come.
We know the big Fed meeting is just weeks away. It is at the top of every investor’s mind right now.
You can’t emphasize enough how much of a blow to the economy more rate hikes will do.
It’s the whole reason I’ve been bearish overall. This is setting up for a potential disaster. It’s also why I set up the #VIXWATCH I mentioned last week. Follow me on Twitter for a daily following of market volatility, @ChadShoopGuru.
However, it could all be avoided if the Fed easy off the brakes a little.
More on that in the coming weeks as we get closer to the Fed meeting.
For now, stay cautious. Use the rally to add protection and hedge your downside risk.
That’s all for today.
Be sure to let us know how you are handling this volatile market. Shoot us an email at info@sealalphateam.com.
Be on the lookout for more great content throughout the week.
Regards,
Chad Shoop, CMT
Editor, Bank It or Tank It