The major market index was lower 16 out of 22 trading days during the month. It was tied for the third-worst month since 1928 and THE worst over the past 48 years.
When a month ended with as many down days as October just did, the selling bled over into the next month almost every time,” according to esteemed analyst Jason Goepfert. “The first couple weeks of the following month managed to buck the downtrend only 2 out of 12 times. The risk/reward during the next month was skewed horribly to the downside, among the worst ratios we’ve ever seen. This kind of selling pressure was seen during some of the worst market environments, and buyers were not eager to step in.”
Year to date the S&P 500, Nasdaq 100 and Dow are up 2.5%, 7.7% and 2.7%, respectively. Given the recent volatility in the market, the aforementioned gains aren’t bad.
But our strategies have performed far better.
Our strategies thrive on fear in the market. Fear creates opportunities.
And we can easily see that fear has returned to the market by looking at one chart . . . the VIX.
The VIX is known as the investor’s fear gauge and represents how much the market thinks the S&P 500 index option, SPX, will vacillate over the next 12 months.
One year ago, the VIX was trading around 10.20. Now it sits at 19.94, just above its average. That’s a 95.5% gain in one year. But very few investors are talking about the gain.
Well, unfortunately, most investors don’t know how to take advantage of volatility’s return.
But we welcome the return of market volatility. In fact, we encourage it.
The return of market volatility has allowed us to average 11.5% per trade over 37 trades in 2018. Think about it . . . an 11.5% return each time you make a trade . . . that is well above the returns of the major market indices.
Remember, our returns are taking place during a tumultuous market environment.
And if history repeats itself we could see a continuation of difficult times.
But that is OK . . . because we thrive in tumultuous market environments. While most investors have been losing money recently, we’ve been confidently making money.
Our high-probability strategy allows us to take advantage of market volatility, which in turn allows us to make money in up, down or sideways markets.
As many of you are already aware, I’ve been speaking about return of market volatility for well over a year.
The VIX hit all-time lows back in 2017.
The fear index has only dipped below 10 three times since 1991. Each time the VIX witnessed a bull market that lasted for six to eight years. If history repeats itself, we could be in for an incredible opportunity.
We’ve seen incredible results so far . . . but if we are indeed in the infancy of this bull market in volatility we are in store for some good times ahead.