Me is back. October is a month that made its spot in trading history.
- Sharp reversal. This October could be 1st time since March 2009 when S&P 500 fell by >7% only to end the month positive.
- Volatility event. VIX is the volatility index measuring the fear level of the market.
VIX is a trademarked ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 indexoptions. Often referred to as the fear index or the fear gauge, it represents one measure of the market's expectation of stock market volatility over the next 30 day period.
Since the first availability of VIX data in 1990, the VIX has only jumped 74% during a 5-day period on a handful of occasions: 1994 (surprise Fed rate hike); 2007 (Shanghai market crash); 2010 (euro zone crisis); and 2011 (more euro zone crisis.) In other words, the past month was nearly unprecedented and exceeds the 2008 financial crisis, the dotcom crash, LTCM, etc. in terms of the magnitude of the VIX spike.
Since we are using the month end signal for portfolio maintenance, it has no big change.
- SP 500 (Risk ON)
- MSCI EAFE (The Most Famous International Index) (Risk off)
- U.S. 10-Year Government Bonds (Risk ON)
- NAREIT (U.S. Real Estate Index) (Risk ON)
- SP GSCI (Goldman Sachs Commodity Index) (Risk off) / GLD (Risk off)
- US Dollars / UUP (Risk ON)
In the charts below, the lighter color Moving Average is 200 Day, which is very close to the IVY Portfolio setup.
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