March 27, 2017
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Was last week the first real test to the so called Trump rally which had taken the Dow from 17,888 to 20,596 since the election, good for up 18% at its highs. The Trump Rally has been known for, if nothing else, its persistence – with the market seemingly climbing day after day, week after week without pause, as evidenced by an incredible 110 days without a 1% decline.
That all came to an end last week, where we gave back 1.68% for the week, and fell 1.14% in a single day (for those of us who were around back in the ‘old days’ of just 5+ years ago, its laughable that a move of 1% is newsworthy) when markets reacted to the news GOP leaders were trying to fast track their new bill.
Fast forward to when Speaker of the House Paul Ryan pulled the bill due to lack of support from majority controlled party – and we dare say we’re seeing some market volatility.
We’re not going to try to explain why the market reacted the way it did, we’re just interested that it did last week. How Trump would affect markets and volatility was one of the number one questions entering 2017. There’s plenty of data showing that policy and economic shifts are correlated with market uncertainty, and it’s something we covered in length in our 2017 Managed Futures Outlook. The question therein and the question before everyone now – is whether this is the “good” (for most trading strategies) type of volatility that is directional, extended volatility moves, or whether it is more of the binary event type of volatility where it’s on for a short period of time following an event like Brexit or the election, only to see market action reverse course and volatility erased.
A down week is more than we’ve had in quite a while, and the VIX seems to be paying attention a bit, hitting new 2017 highs this morning, so this is more than just an academic exercise. There’s real money on the line here. Which is why we’re gathering together some of the smartest “volatility traders” we know for a webinar on VIX futures and options to dive into these questions and more.
The VIX is much more than just an index these days. There’s actually a way to invest in these moves up and down through VIX Futures and Options, and the resulting ETFs tracking such. It also happens to be one of the fastest growing strategy types from what we’re seeing in the space, and among the best performers in 2016, among managers we track.
So join us for this unique webinar, Thursday, April 13th (free to register), and see just how these pros are thinking about volatility.
We don’t know what Trump’s first market test, 2nd, and 3rd, and so forth over the next four years will mean exactly for market volatility. But that doesn’t mean we can’t do something about it… and invest in volatility instead of eternally fighting it. Please join us – and ask them some questions while you’re at it.
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