Below is a chart and brief excerpt from today's Early Look written by Hedgeye CEO Keith McCullough.
If Oil (WTI) Volatility were to hold a breakout above the 38 level, not only will my SIZE in Oil go down (because I’ll lose more money being long it!), but I’ll stop myself out of it… assuming the market is starting to discount another #Quad4.
Similarly, if US Equity Volatility (VIX) were to hold a breakout above the 16 level, I’d expect to see more down days for Tech (XLK) like we saw yesterday (XLK was down -2.4%)… assuming the market is, again, starting to discount #Quad4 in Q2.
Remember, as The Quads change from #Quad3 to #Quad4, both Energy (XLE) and Tech (XLK) go from Top 4 Sector Style longs to shorts.