31 October 2017: Calm before the storm?

The Dow Jones Industrial Average (in short: the Dow) set another record yesterday, with a historic period of relative tranquility on Wall Street. The Dow has experienced 51 consecutive trading sessions (and counting), since 18 August 2017, without a 1% move. This is the longest period without at least a 1% intraday move in history, dating back to 1930. Meanwhile, the fear index, the CBOE Volatility Index (in short: the VIX), has mostly been hovering around 10 points since the election of Donald Trump last year. Its historical average is somewhere around 20 points. Should we read something into this? It is hard to predict the future. But history teaches us that the previous periods during which we saw comparable phenomena were 1996 and 2007. We know what happened in the years after those years…

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US stocks closed lower on Monday following a report that the House of Representatives was considering phasing in a cut to corporate taxes. The Dow Jones fell 0.36%, the S&P dropped 0.32% and the NASDAQ lost 0.03%. Volatility was on the rise: the VIX rose no less than 7%, but UVXY ETFs only profited marginally (+1.5%). XIV ETNs suffered a modest loss: -0.8%.
All of our models declined slightly. Danny Daredevil‘s RSS dropped to just below 20%. Adventurous Anny saw her RSS decline to 12%. Solid Suzy and Lazy Larry‘s RSS moved down to below 65%. Their AAR is still a healthy 114% nevertheless.
None of our models gave a trading signal at the end of yesterday’s session. Danny and Anny are close to such a signal, however.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil XIV 1 January 2016

19.73%

-70.30%

-14.06%

10%

Adventurous Anny XIV 6 March 2017

12.20%

12.20%

3.41%

19%

Solid Suzy XIV 6 March 2017

64.67%

64.67%

12.57%

114%

Lazy Larry
XIV 6 March 2017

64.67%

64.67%

12.57%

114%

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

 


Meanwhile in Japan

Last week, René watched an episode of Travel Man, a British television travel documentary series in which presenter Richard Ayoade travels to different locations. In each episode, Richard Ayoade is joined by a different celebrity guest. René watched Richard explore Copenhagen with his guest Noel Fielding. They showed how you can rent an electric bicycle to explore the city. No online reservation necessary, let alone a walk to a ticket office. Just type in your data on the bicycle’s built in tablet, pay with a card, hop on the bike and go. Or, in the words of the website of the Copenhagen Electric Bike Share Program Bycyklen: “Their new e-bike share program offers a look at the future of urban transportation for the rest of us. […] The Bycyklen program offers e-bikes […] with features like a touch screen tablet computer on the handlebars with built in GPS for finding docking stations, public transit, and tourists spots like museums and restaurants.” René liked the idea, and wondered how many cities would follow.
Walking through the city of Hiroshima today, just days after seeing Ayoade and Fielding e-biking in Copenhagen, his attention was grabbed by a row of shiny red bicycles in the picture below. In Hiroshima, the program goes by the name (Community Cycle) Peacecle. The website of Peacecle says this about it: “[…] has docking ports in each area, and you can rent [sic] bike at any docking port and return it to any docking port you like within [sic] designated area.”
One day you have never heard of something, the next day it seems commonplace already. The world is changing fast.