Risky VIXY falling wedge, as economy future uncertain.
I am long on this, but it's best to wait until you can actually see it break some trendlines. This EFT will punish you if you are a long time holder.
With so much uncertainty lately, what better than to take a closer look at the "Fear Index". Garunteed to lose about 20%/year, this fund is only beneficial during times of the market crashing. Basically, the SP500 crashes, this volatility fund goes up. I am keeping an eye on this, as any imminent crash will double/triple this chart. In the meantime, we can see it go lower as expected. Let's look at reasons why it would spike or decrease:
Let's take a look at some destabalizers (reasons this chart should go up), and then reasons the economy might stabalize (reasons for this chart to fall) as well.
Covid - a huge reason we are actually in this mess is the new pandemic gripping the world. Many US businesses have shut down, or stopped operating in the office, and started sending employees home. While many were able to hold onto their employees, the bigger businesses are even starting to let employees go within the next couple months. The smaller companies have already started that trend.
Unemployement- This is real, a growing number of people unemployed collecting benefits. A new stimulus package is certainly underway, however - it is said this could take weeks, and many jobless claims may suffer. This is a perfect driver of the fear index. As time goes on, the unemployment number HAS to have an impact on this economy. There is no way around it. Even if the Fed drives money in, a crash is certain. Just takes one bankruptcy (see 2008). This brings us to my next point:
Covid unemployment benefits: - Normally, a stabalizer, however there is no policy putting this back in place immediately. What happened when congress failed to agree upon/enact a budget in 2008? Crash. Hopefully this won't happen, but as time draws near, this could have a major impact on the performance of the market.
Earnings - This is both a destabalizer as much as it is a stabalizer. Companies (like ATT (T)) are posting good numbers and may continue, however - we cannot ignore that the numbers have been adjusted and are lower due to the pandemic that is occurring now. We are expecting some HUGE companies to post earnings next week, and if they are below expectations, we may see some volatility crank up.
Current market - We can see now, Gold futures are on the rise, SP500 is losing points for the last couple days in a row. Negative Market conditions can and will impact the outlook of the overall market.
Stabilizers:
The Fed - The Fed is pumping money into this economy just like they did when they doubled the Federal Reserve back in 2007, 2008. This leads to a pretty wil impact on the stock market, which is inadvertent because their main focus has been the credit market (if this fails, we're really screwed). So we can see since March, the Federal Reserve Balance sheet has increased quite a bit - almost doubling again, which may be why the market has been performing so well.
Stimulus money - We are also earning some extra income for everyone, and especially the unemployed, receiving an extra $600/week cushion! This really helps out, and his absolutely needed, but this will obviously have a bigger unwanted impact later on. Regardless, for now, this helps stabilize the economy, and the market.
Election year - As was 2008, but you think the sitting president wants to see a market collapse during their term? No. Expect to see as many bailout bills create as possible to avoid or minimize impact, regarless of future impact this will have. Who cares about 3-4 terms from now? As long as the President can keep up the illusion of a stable economy, it will be stable. It's as easy as that. Once people start to react to fear or greed, you can expect this stock to skyrocket.
With so much uncertainty lately, what better than to take a closer look at the "Fear Index". Garunteed to lose about 20%/year, this fund is only beneficial during times of the market crashing. Basically, the SP500 crashes, this volatility fund goes up. I am keeping an eye on this, as any imminent crash will double/triple this chart. In the meantime, we can see it go lower as expected. Let's look at reasons why it would spike or decrease:
Let's take a look at some destabalizers (reasons this chart should go up), and then reasons the economy might stabalize (reasons for this chart to fall) as well.
Covid - a huge reason we are actually in this mess is the new pandemic gripping the world. Many US businesses have shut down, or stopped operating in the office, and started sending employees home. While many were able to hold onto their employees, the bigger businesses are even starting to let employees go within the next couple months. The smaller companies have already started that trend.
Unemployement- This is real, a growing number of people unemployed collecting benefits. A new stimulus package is certainly underway, however - it is said this could take weeks, and many jobless claims may suffer. This is a perfect driver of the fear index. As time goes on, the unemployment number HAS to have an impact on this economy. There is no way around it. Even if the Fed drives money in, a crash is certain. Just takes one bankruptcy (see 2008). This brings us to my next point:
Covid unemployment benefits: - Normally, a stabalizer, however there is no policy putting this back in place immediately. What happened when congress failed to agree upon/enact a budget in 2008? Crash. Hopefully this won't happen, but as time draws near, this could have a major impact on the performance of the market.
Earnings - This is both a destabalizer as much as it is a stabalizer. Companies (like ATT (T)) are posting good numbers and may continue, however - we cannot ignore that the numbers have been adjusted and are lower due to the pandemic that is occurring now. We are expecting some HUGE companies to post earnings next week, and if they are below expectations, we may see some volatility crank up.
Current market - We can see now, Gold futures are on the rise, SP500 is losing points for the last couple days in a row. Negative Market conditions can and will impact the outlook of the overall market.
Stabilizers:
The Fed - The Fed is pumping money into this economy just like they did when they doubled the Federal Reserve back in 2007, 2008. This leads to a pretty wil impact on the stock market, which is inadvertent because their main focus has been the credit market (if this fails, we're really screwed). So we can see since March, the Federal Reserve Balance sheet has increased quite a bit - almost doubling again, which may be why the market has been performing so well.
Stimulus money - We are also earning some extra income for everyone, and especially the unemployed, receiving an extra $600/week cushion! This really helps out, and his absolutely needed, but this will obviously have a bigger unwanted impact later on. Regardless, for now, this helps stabilize the economy, and the market.
Election year - As was 2008, but you think the sitting president wants to see a market collapse during their term? No. Expect to see as many bailout bills create as possible to avoid or minimize impact, regarless of future impact this will have. Who cares about 3-4 terms from now? As long as the President can keep up the illusion of a stable economy, it will be stable. It's as easy as that. Once people start to react to fear or greed, you can expect this stock to skyrocket.