18 May 2017: Panic!

Words inspired by an eighties hit of The Smiths: Panic on the stock market of Wall Street / Panic on the screens of the NASDAQ / I wonder to myself / Could life ever be sane again? Yesterday, we saw a change of sentiment at work in the stock markets. It started with moderate losses, but ended in what could almost be described as blind panic. Volatility started rising and continued rising up until the last seconds of trading. As mentioned in this place a few days ago: just one stock investor too many had woken up in a negative mood yesterday morning. But all in all, it feels like an overreaction. We can be sure that another group of investors will wake up, either this morning or at the start of one of the upcoming trading days and think: What a beautiful day and what a lovely opportunity to buy stocks! A rush and a push and this stock market is ours. 

white-chapel-logo-smallWhat a day in the stock markets yesterday! All major US indices nosedived: the NASDAQ lost as much as 2.6%. The S&P 500 (-1.82%) and the Dow (-1.78%) shared the misery. Volatility exploded: the VIX gained almost 50%. UVXY ETFs benefited to a great extent:  +36%. XIV ETNs had to take a huge loss: -18%.

Danny Daredevil reversed his loss for 2017 and his YTD is now 14%. His AAR is back above 200%. Adventurous Anny was still holding cash yesterday and her RSS remained at 22%.  Solid Suzy and Lazy Larry lost almost all of their gains for 2017 and their RSS dropped to 1.6%. 

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil XIV 1 January 2016

359.50%

13.99%

-1.98%

202%

Adventurous Anny XIV 6 March 2017

21.78%

21.78%

0.0%

168%

Solid Suzy XIV 6 March 2017

1.54%

1.54%

-7.28%

8%

Lazy Larry
XIV 6 March 2017

1.54%

1.54%

-7.28%

8%

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

 

Two of our models gave a trading signal at the end of yesterday’s session: Danny Daredevil and Adventurous Anny. Danny switched from UVXY ETFs to XIV ETNs and Anny used her cash to buy XIV ETNs at the opening of today’s session. 

 

 

Yesterday, after working hours, René decided to enjoy the summer weather by paying a visit to Jachthaven Biesbosch, a yacht club located on the edge of the Biesbosch National Park. René used to visit this place several times a year to go boating. But this time, he realized that it had been quite a while since his last visit. Long enough to make a walk along the yachts feel like a trip down memory lane.
From the late 1970s up to the year 2013, René and his old-time friend and sidekick Hans used to go boating whenever they could. As the years went by, the boats got bigger, faster, and more luxurious, but the fun they had on the water stood the test of time: it stayed exactly the same, regardless of the value of the equipment at hand.
René couldn’t help but become mildly nostalgic at the sound of the wind, turning the sailboat mast wiring into wind chimes – a very specific sound, that can only be heard at marinas and boatyards on windy days.
Four years ago, much to René’s sorrow and perplexity, all this came to an abrupt halt. What exactly happened, and what René learned from it, is a suitable topic for tomorrow’s ‘Reflections’.

Jachthaven Biesbosch on 17 May 2017, the warmest 17 May recorded to date