23 October 2017: Vertigo

Last week, one of These Dutch Guys received a phone call from a good friend, a successful businessman who invested a considerable amount of money in the stock market in recent years. “I’m selling all my stocks,” he said. “This bull market is giving me the creeps. I don’t trust it anymore. Right now, I prefer cash.” An article that was published at MarketWatch yesterday, makes it clear that this friend is not the only one showing this ‘fear of heights’. In the article, Maris Ogg, president at Tower Bridge Advisors, is quoted: “We are getting more calls from our clients asking us whether they should sell their stocks rather than buy them, because they are scared. This is not what you normally see at market tops.”
One seller. Two sellers. A group of sellers. An army of sellers. Peter Sellers. It’s how bull markets make way for bear markets.

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Stock markets ended last week on a high note. Progress on tax reforms and positive earnings reports were all they needed to keep the rally going. All indices posted big gains Friday. The NASDAQ was up 0.36%, the S&P 500 gained 0.51% and the Dow closed 0.71% higher for the day. For the week, the NASDAQ moved up 0.35%, the S&P 500 gained 0.86%, and the Dow was the clear winner: +2% (and breaking through the 23,000 level as well — for the first time ever).
Volatility stayed low last week. Except for a short lived spike on Thursday morning, the VIX kept hovering around the level of 10 points. The VIX ended the week at 9.97 (-0.80% for the day, +3.74% for the week). UVXY ETFs suffered another loss on Friday: -3.60%. XIV ETNs did better, gaining 1.69%.
Danny Daredevil is in possession of UVXY ETFs. His RSS dropped to just over 5%. Adventurous Anny is holding cash. Her RSS remained at 9%. Solid Suzy and Lazy Larry saw their RSS rise to 69%.
None of our models gave a trading signal at the end of Friday’s session.

Model  Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

5.12%

-73.92%

-24.55%

3%

Adventurous Anny Cash 6 March 2017

9.22%

9.22%

0.67%

15%

Solid Suzy XIV 6 March 2017

68.99%

68.99%

15.52%

131%

Lazy Larry
XIV 6 March 2017

68.99%

68.99%

15.52%

131%

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

 

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In the picture below, René is holding a banana in his hand. It’s been a while since he has eaten a banana. But from now on, he will eat at least one a day, he decided. That is, as long as bananas are available. It is rumored that the entire banana species is threatened with extinction by a nasty fungus…

Photo of James Stewart: Still from the movie Vertigo (1958) by Alfred Hitchcock (http://www.archive.org/details/HitchcockTrailers) [Public domain], via Wikimedia Commons