How to Stay Ahead of Market Volatility

[Jeff Clark's Market Minute]( How to Stay Ahead of Market Volatility If I had to bet on only one thing this week, I’d bet on a spike in volatility. Of course, it was only last Monday when I wrote, [“Volatility is poised to snap back.”]( And, while the [Volatility Index (VIX)]( did pop from 12.65 to 13.42 – a gain of just over 6% – that’s hardly the move I was looking for. The VIX is set up for a much stronger move. Recommended Link [Americans Could See Nasty New Tax July 21]( A new currency law is currently being discussed. [And it could mean big changes for Americans...]( In short, a new type of "smart" dollar is being considered. One that could easily let the government implement a national "soda tax," even instantly set up a gun registry. The scariest thing of all is this idea is quickly gaining traction in upper Washington circles. We've spent the last 6 months investigating this story, and you won't believe what we've uncovered... [Check it out here.]( - Here’s the updated daily chart of the VIX… The indicator at the bottom of the chart is the MACD histogram. Longtime readers know we like to use the [MACD momentum indicator]( to help identify potential reversals in a trend – either from a downtrend to an uptrend or from an uptrend to a downtrend. The MACD indicator will often reverse before the price of a stock reverses. That’s not always true, though, in the case of the VIX. The MACD indicator for the VIX tends to move at the same time as the price. So, there’s not much predictive value in following the MACD indicator on the VIX. There is value, however, in following the MACD histogram. Without getting too complicated, the MACD histogram helps to identify a potential reversal in the MACD momentum indicator. In other words, the histogram is an indicator of an indicator. Now… I won’t blame you if you’re rolling your eyes at this point. Using an indicator of an indicator to justify a trading position seems a little ridiculous. It’s like we’re reaching for anything to help confirm our bias. But, in the case of the VIX, the MACD histogram has a pretty good track record for identifying reversals. Look back at the chart above for some examples. While the VIX was falling last September, the MACD histogram was rising. Three weeks later, the VIX was 18% higher. In March, while the VIX dropped to a lower low, the MACD histogram rallied. This “positive divergence” preceded a 71% spike in the VIX two weeks later. Last Monday, the VIX dropped to a lower low. Meanwhile, the MACD histogram has been rising. I suspect this is warning us that the 6% rise we got in the VIX last week was just the beginning of a larger move higher in volatility. Best regards and good trading, Jeff Clark Reader Mailbag Today, a reader writes about their return to option trading… Jeff, today I felt compelled to write you a thank you note. In short, I signed up for your services in February of this year. I started with a $10,000 investment which has now turned into $31,000 in 3 months. I used to trade options a long time ago, but ended up losing all the money I made, so I decided to quit trading 10 years ago. The main reason I quit is because I felt like I was gambling back then; I had no direction. I signed up to your publication with a little bit of hesitation, but after seeing your methodical approach and research, I must say that it’s the best decision I’ve made in years. I have your app on my phone and I must say that I read every single recommendation and alert! It makes my mornings! Once again, thank you! – Fadi Thank you, as always, for your thoughtful insights. Keep them coming [right here](mailto:feedback@jeffclarktrader.com). In Case You Missed It… There's a tiny clause buried in the new tax bill that's gone completely unnoticed by the mainstream media... It has nothing to do with income taxes, estate taxes, or special deductions. In fact, this section of the tax bill – located on page 553 – has been completely overlooked by accountants... even though it creates a potential $460 billion windfall for everyday Americans. [Click here to get all the details…]( [image]( This email was sent to {EMAIL} as part of your free subscription to Jeff Clark's Market Minute. [Click Here]( to change your delivery preferences or unsubscribe. © 2018 Jeff Clark Trader, 455 NE 5th Ave, Suite D286, Delray Beach, FL 33483, USA. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from the publisher. Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not designed to meet your personal situation – we are not financial advisors nor do we give personalized advice. The opinions expressed herein are those of the publisher and are subject to change without notice. It may become outdated and there is no obligation to update any such information. Recommendations in Jeff Clark Trader publications should be made only after consulting with your advisor and only after reviewing the prospectus or financial statements of the company in question. You shouldn't make any decision based solely on what you read here. Jeff Clark Trader writers and publications do not take compensation in any form for covering those securities or commodities. Jeff Clark Trader expressly forbids its writers from owning or having an interest in any security that they recommend to their readers. Furthermore, all other employees and agents of Jeff Clark Trader and its affiliate companies must wait 24 hours before following an initial recommendation published on the Internet, or 72 hours after a printed publication is mailed.