6 September 2017: North Korean fireworks

North Korea’s latest atom bomb test shook stock markets yesterday. Just like a month ago, volatility shot up. But although tensions between North Korea and the rest of the world appear to be on the rise, the effect on the markets in terms of feelings of anxiety and fear was smaller than at previous occasions. Just like other human beings, stock market traders fall victim to habituation. In the analysis of the psychology of stock markets, it is not only the substance of the matter that counts. It should also be considered in its context. Don’t be surprised when the effect of last weekend’s bomb test has faded before the end of the week. However, North Korea will be celebrating its 69th Day of Independence this Saturday. We can be quite sure that this celebration will be accompanied by some ‘fireworks’. Expect volatility to be on the rise after the weekend…

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Financial shares were hit the hardest yesterday. All major US indices closed lower. The S&P 500 dropped as much as 2.2% during the day, but closed 0.76% lower. The Dow recorded a similar loss: -0.8%. The NASDAQ lost almost 1 percent: -0.93%.
Volatility had a wild ride. The VIX was almost 40% higher during yesterday’s trading session, but closed with a gain of ‘only’ 21%. UVXY ETFs were the big winner: they gained more than 10%. XIV ETNs had to take a major step back: -5%.
Danny Daredevil climbed back to an RSS of almost 90%. Adventurous Anny is still holding cash. Solid Suzy and Lazy Larry paid the price of rising volatility: their RSS dropped to below 20% and closed at 19.4%.
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

89.38%

-53.02%

-56.49%

46%

Adventurous Anny Cash 6 March 2017

3.84%

3.84%

-25.11%

8%

Solid Suzy XIV 6 March 2017

19.36%

19.36%

-4.64%

42%

Lazy Larry
XIV 6 March 2017

19.36%

19.36%

-4.64%

42%

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

 

Gefundenes Fressen III

A novelty in our irregularly appearing series of pictures of found food: Gefundenes Trinken. From the dirt on the outside of the cup, it can be derived that this cup has undergone at least one rain shower. So, it might have been the rain that has almost filled the cup to the brim. The result is the same, however: a piece of food that looks like it has been abandoned before it was consumed.