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Chart of the Day / Three Ways to Position for Volatility  

Three Ways to Position for Volatility  

November 12, 2018

Well… this is exhausting.

Markets fell another 400 points on Monday thanks to Apple (AAPL), a rising U.S. dollar, and lingering concerns about the global trade war.

Apple plummeted toward its 200-day moving average after Lumentum Holdings – which makes the technology for the iPhone face-recognition function – cut its outlook for the fiscal second quarter of 2019. According to CNBC, CEO Alan Lowe said one of its largest customers just asked it to “materially reduce shipments” for its products.

As a result, much of the tech sector is in disarray.

The U.S. dollar can be blamed, too as it runs to a high of 97.5 – its highest point since June 2017.  Many are worried what this could mean for multi-national earnings.

And then there are more concerns over trade wars.  Hopefully, we’ll see a resolution or some calm when President Trump and China’s President Xi Jinping meet at the G-20 summit.

Technically, things don’t look much better.  After partially refilling the October 2018 gap, the DJIA is again coming under pressure, unable to hold its 50-day moving average.  From here, with such considerable tension, the market could again break below its 200-day.

Until there’s some clarity, the best thing to do is again position for volatility with the following:

  • Velocity Shares Daily 2x VIX Short-Term ETN (TVIX)
  • iPath S&P 500 VIX Short-Term Futures (VXX)
  • ProShares Ultra VIX Short-Term Futures (UVXY)

 We did very well with each of these the last time markets fell apart on fear.