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With the Dow Jones Industrial Average, NASDAQ Composite, and S&P 500 all in negative territory for the year, it's no wonder some traders are running for the hills.
At the same time, we have some investors in rose-colored glasses ready to call the market bottom each time we hit a new low. And then we hit a new low. And then we hit a new low…
Starting to see a pattern here?
Remember the Trading Commandment I mentioned? "The trend is your friend… until it isn't."
Well, the trend we're dealing with now is an elevated CBOE Volatility Index – Wednesday marked 51 consecutive days above 15 – and a market on the decline.
I have to admit here that my forecast that stocks could find some kind of bottom when the VIX hit 25 is toast.
Now I'm looking for a VIX above 30, at minimum. I'll tell you why – and what to do about it…
But first, buckle up…
About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
At heart Chris is a quant - like the "rocket scientists" of investing - with a specialty in applying advanced mathematics like stochastic calculus, linear algebra, differential equations, and statistics to Wall Street's data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It's the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron's, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Strikepoint Trader and contributes to Money Morning as the Quant Analysis Specialist.