Monday’s spike in volatility shook the markets. Despite a small bounce, we aren’t out of the carnage yet.
Unprecedented market dynamics are threatening to implode. The top stocks in the S&P 500 are propping up the index, while the vast majority are underperforming.
Hedgeye subscribers have been well prepared to manage risk in their portfolios, and avoid major drawdowns from negative shocks like Monday’s selloff.
Our #VASP (Volatility Adjusted Signaling Process) continues to signal that Monday’s selloff wasn’t a temporary dip.
We are currently in what we call a #Quad4 Drawdown, characterized both Growth and Inflation slowing. This macroeconomic environment has historically been a bad omen for equities, threatening to send stock prices down further.
As McCullough explained on The Macro Show: “It was a move that was in line with what happens in #Quad4. It was a move that we front-ran through the lens of Utilities, Gold, long Bonds, etc.”
With election-related dynamics coming into focus, more volatility ahead is likely in the cards. A pre-election buildup in volatility is typical, and with VIX futures already elevated, we’re at the point where volatility typically shifts even higher.
The US Equity Volatility Index (VIX), our barometer for market turmoil, which broke out into what we call the F-Bucket (VIX > 30) triggered a market selloff.
The upcoming weeks could present both challenges and opportunities for investors. Now is not a time to panic.
If you’re an investor interested in learning more about our unique process (and how to shift the odds in your favor) we encourage you to visit Hedgeye University. Your tuition is on us!
