Volatility Spiked As Bottoming Process Begins – Worst Case Still 4% Lower
When I ended Monday’s missive, I said we would discuss volatility on Wednesday. So I am one day late. The index or VIX is below. At stock market bottoms, the VIX usually soars which it just did. However, it can always soar higher. A VIX above 30 is a definite sign that there is some panic in the markets and it becomes tougher to navigate. A VIX in the low 30s says the market should experience 2% daily moves in either direction. That’s not easy on investors, but that’s what happens when markets are trying to hammer in a bottom.
The stock market has started the bottoming process, but that doesn’t mean the market cannot go lower. It certainly can. A breach of this week’s low would create some panic and possibly confirm the low. As I wrote about last week, my worst case scenario for March is somewhere around 6500. This is not the end of the bull market and I do not think this is the 10-15% correction I forecast to begin from a high in Q2.
If the stock market does hit my worst case scenario, I will certainly consider some ROTH conversions and more tax loss harvesting which every financial advisor on earth should always be discussing. To be blunt, I would fire any advisor who doesn’t have this in their arsenal as evergreen advice.
On Monday we bought GDX, GDXJ, more QLD, more MQQQ and more NEM. On Tuesday we bought more GDX, more GDXJ and more LRN. We sold TQQQ, OWL, some MQQQ and some XOM. On Wednesday we sold some QLD.
