13 April 2017: The VIX is rising

The VIX, the so-called fear index, has been on the rise for more than a week. This is due to factors that are mainly not related to stocks themselves: geopolitical tensions concerning Syria, North Korea, etc. Stock prices have not moved that much, certainly not to the degree at which the VIX did. The VIX is based on options. Option traders do not like uncertainty, caused by whatever source. They make a prediction whether or not market sentiment will be influenced by external factors. For the short term, they definitely think that geopolitical tensions will influence stock markets.
President Donald Trump had some good news for option traders yesterday: in a Wall Street Journal interview, he did not express a disliking of current Fed boss Janet Yellen. So, there might be an increasing chance that Trump will grant her a second term. A future change would imply uncertainty. And that is what option traders do not like.

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US indices closed down (the Dow 0.3%, the S&P 500 0.4% and the NASDAQ 0.5%), caused by lingering geopolitical concerns and President Donald Trump’s comments on the dollar and interest rates. The VIX kept moving up: +4.6%. UVXY ETFs booked another gain: +1%. XIV ETNs recorded a very small loss: -0.05%.
Danny Daredevil missed an RSS of 500% by 1 percentage point. Adventurous Anny is still holding cash: her RSS remains at 22%. Solid Suzy and Lazy Larry closed virtually unchanged and remained at -4% since their start.
None of our models gave a trading signal at the end of yesterday’s session.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

498.94%

48.58%

27.77%

304%

Adventurous Anny Cash 6 March 2017

21.78%

21.78%

0.00%

564%

Solid Suzy XIV 6 March 2017

-3.99%

-3.99%

-12.34%

-32%

Lazy Larry
XIV 6 March 2017

-3.99%

-3.99%

-12.34%

-32%

RSS = Return Since Start | YTD = Year-To-Date | QTD = Quarter-To-Date | AAR = Average Annual Return

 

The area surrounding Tim’s favorite lake, the Galgeven, has undergone some dramatic changes. Almost half of the lake’s shore has been stripped of trees and shrubs. As one of the best Dutch soccer-playing philosophers once remarked: Every disadvantage has its advantage. Totally new panoramas have opened up.
Tim sat down on the stump of a tree and enjoyed the view. From the annual rings of the stump, Tim concluded that the tree must have been around eighty years old when it was cut down. He noticed that at the age of eight, the tree must have experienced circumstances which prevented it from growing fast. The eighth annual ring from the middle was barely visual. Back at home, Tim checked the website of the KNMI, the Dutch national weather service. He found out that 1947 was the hottest summer of the century in the Netherlands. This summer was preceded by one of the harshest winters of the century.