The Feds are spooking the market as they try to walk the tightrope they need to make the illusive soft landing they are shooting for. The reaction is crystal clear and shows that traders are expecting thing to get wild.

The VIX, the CBOE’s indicator that shows expected volatility, shot up yesterday. This is a signal that traders are expecting things to get bouncy and it has historically meant the market will drop.

When momentum gets exhausted, this pattern pays out. To recognize the signs, click here.

You can see on the far right of the chart above that yesterday was the biggest jump in the VIX we have seen in a long time. But you’ll also notice that it is right up against that red line. That is the 200 day moving average and happens to be a key factor in many automated trading models. If the VIX pushes through that line you can expect a big move in the market.

This is a great time to look at some put options and inverse ETFs. We just mentioned these the other day but the signals are getting louder and louder telling us those tools are going to be very helpful.

Keep learning and trade wisely,

John Boyer


Market Wealth Daily