Investing in the stock market can be a rollercoaster of emotions, especially when the Cboe Volatility Index, known as the ‘fear gauge,’ spikes above 25, and even more so when it reaches 65. These spikes suggest that market fears are running exceptionally high based on real-time pricing of S&P 500 Index options. The recent jump in the VIX to 65 is the highest since the COVID-19 related decline in 2020, signaling the onset of a high-volatility regime.
At Extreme Investor Network, we predicted the possibility of a high-volatility regime back in May, and it seems that prediction is coming true. While this may not necessarily indicate a long-term bearish trend for the S&P 500, it does suggest we can expect more pullbacks and corrections as the uptrend becomes more gradual.
Our experts are closely monitoring the market indicators, such as the monthly VIX chart and the monthly MACD crossover, to gauge the potential impact on the S&P 500. Elevated volatility often leads to more pullbacks in the market, and our DeMARK Indicators on the monthly S&P chart are supporting the idea of four months of consolidation.
In terms of investment strategy, we recommend staying with core long positions while reducing more opportunistic or high-beta exposure. If the long-term trend following measures start to deteriorate, we may advise reducing exposure further. However, a rebound in the S&P 500 can be used to hedge partial exposure from a top-down perspective.
At Extreme Investor Network, we provide valuable insights and analysis to help investors navigate through periods of high volatility and make informed decisions when it comes to their investment portfolios. Our team of experts is dedicated to keeping our readers updated on the latest market trends and providing actionable strategies to optimize their investment returns. Join us at Extreme Investor Network for exclusive research and expert advice to stay ahead of the market curve.