30-Day Warning: Volatility Is Here to Stay

[TradeSmith Daily]( 30-Day Warning: Volatility Is Here to Stay If you wanted a breather from the markets’ roller coaster ride, it looks like that ride isn’t going to stop anytime soon. There is a key index, known as the VVIX, that’s been telling the tale of the tape. And between it and the CBOE Volatility Index (VIX), the markets are telling me volatility is here to stay for at least the next 30 days. How am I able to interpret the information? Let me break it down for you piece by piece. First, let’s do a quick refresher on the VIX. RECOMMENDED LINK [Today he earns up to $20,000 a week*]( We checked in with Rob after he sent this mind-melting review. Here’s a snippet from the email he sent: “Keith Kaplan… I send my accolades out to you. I've been trading for 8 weeks. I'm up $20,000 per week — that's $160,000 total. I think this service is phenomenal.” While results like Rob’s aren’t “normal” by any stretch… after reading that email, I HAD to follow up with him. So he agreed to hop on a phone call… It was an eye-opening 45-minute conversation where Rob told me: “As of Friday last week, I am up $284,000.” I knew my readers had to hear about this… [So I included more of Rob’s story — including a VIDEO “demo” of the same type of trade on this website (click here)](. * The investment results described in this testimonial are not typical. Investing in securities carries a high degree of risk; you may lose some or all of the investment. VIX 101 Most retail traders and investors are familiar with the VIX (aka the “fear” index), which is based on S&P 500 index options and measures how much volatility the stock market expects to experience. And we know that the VIX often moves in the opposite direction of the stock market. So when stocks rise, the VIX sinks, and vice versa, as shown in the daily chart below that compares the S&P 500 (top) to the VIX (bottom). TradingView The VIX is a complex calculation done by the Chicago Board Options Exchange (CBOE). They take all the options on the S&P 500 and use this calculation to come up with a number known as the VIX. This number has two meanings: - The implied move for the S&P 500 over the next 30 days as calculated from the options on the S&P 500. - The demand for options 30 days out on the S&P 500 index. What is the significance of this information? It shows us how many traders and investors are buying options on the S&P 500 to hedge their portfolios. More often than not, they do this by purchasing put options that pay out when the market drops. This allows them to offset market risk against a basket of stocks they own and expect to outperform the market. When stocks drop, demand for both put and call options rises, as markets tend to drop violently and recover quickly. This hedging action is what causes the inverse relationship between stocks and the VIX. VVIX 101 The VVIX is the implied volatility index of the VIX, which can sound a bit esoteric. But all it means is that you can buy options, both puts and calls, on the VIX itself. The VVIX does the same thing the VIX does for the S&P 500, just with the VIX. Think of it this way: The market is a sprinter. The VIX is the coach who runs beside the runner to time them. The VVIX is the guy who evaluates the coach. The VIX and VVIX typically move together in opposition to the stock market: - When stocks go up, both the VIX and the VVIX go down. - When stocks go down, both the VIX and the VVIX go up. So the VVIX has two meanings: - The implied move for the VIX over the next 30 days as calculated from the options on the VIX. - The demand for options 30 days out on the VIX. Now, let’s talk about what I see right now. Why I Expect Volatility to Stick Around Since both indexes measure 30 days out, my forecast does as well. In the chart below, you’ll see how the VIX is at relatively high levels while the VVIX is at relatively low levels. TradingView Reading this at face value, the VVIX is saying: We do not expect volatility to change much within the next 30 days. That’s normal when markets are on a bull run and the VIX is at or below historical averages. But neither of those two things are true right now. Reading the VIX at face value, it’s saying: We expect high volatility for the next 30 days. Taking those two statements together, we get the following conclusion: We expect high volatility to remain high for the next 30 days. Here’s what that means for you. RECOMMENDED LINK [Louis Navellier Details The Big Day Coming for Cash Holders]( The explosive rise of tech stocks we saw last year was just the beginning… “The Earnings Whisperer” Louis Navellier released a video detailing several key steps he believes every American should be taking right now. [See it HERE]( Where We Go from Here Markets will eventually find a bottom. Most of the time, that coincides with capitulation in stocks, the VIX, and the VVIX. That’s when everything makes a high-volume reversal, as shown in the chart below. TradingView The yellow arrows highlight two times this occurred, but you can see it on many other occasions as well. In order for markets to find a bottom, we will likely need to see option demand on the VIX itself spike. Therefore, I’ll be keeping an eye out for a rise in the VVIX, and I advise you to do the same. Later this week, I’ll cover some other areas of the market where I expect to see major shifts, so be on the lookout. Enjoy your day, [Keith Kaplan]Keith Kaplan CEO, TradeSmith P.S. Knowing the exact day to get out of a stock could’ve allowed you to add $97,347 (on average) to your account — all without reading charts, crunching numbers, or fiddling with anything technical. Though this once sounded too good to be true, it’s now possible, thanks to a special code that can pinpoint optimal entry points to potentially boost gains as high as 3,713%. [Click here]( to see how it can unlock your profit-earning potential. P.P.S. You’re invited to join our Product Education Lead, Marina Stroud, for her free Beginner Bootcamp training session. Today’s webinar will offer a look at the TradeSmith program settings. These settings are vital to making TradeSmith your own, establishing your entry and exit alerts, knowing when you’ll get alerts, and so much more. All members are welcome to attend. This lesson applies to all TradeSmith products. [Click here to register]( for today’s webinar. The webinar will begin at 1 p.m. Eastern and include time at the end for a question-and-answer session. Best of TradeSmith The chart below represents the best-performing open positions over the last two years, as recommended by our software. 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