After spiking above 50 in early April, market volatility has eased but remains elevated, with the VIX holding steady in the mid-20s as we move into May. In this clip, Hedgeye CEO Keith McCullough shares why he's enthusiastic about the current setup—and why you should be too.
"Understand that a narrowing risk range ups your probability of getting more trades right in U.S. equities. It ups the probability of your longs working,” McCullough says.
"You just cut the [S&P 500] range in half. Why? Because you cut volatility in half.”
Hedgeye categorizes S&P 500 volatility into three distinct VIX “buckets”: the Investable Bucket (VIX 9–19), the Chop Bucket (VIX 20–29), and the “F*$k Bucket” for anything 29 and above.
"There are very few professionals that going back 20 to 25 years have managed the 'F*$k Bucket' really well - we have," McCullough says.
"So, you get more kicks at it and more chances, and that's what we want to be doing in the Chop."
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