Risk Off Event Volatility

Looks like the market has now been prepped for incoming volatility.  To profit in times like this, it is important to remember your risk threshold and your market correlations

With a 2-year wedge breakout on the VIX, equity markets declining, and risk-sensitive currencies finding temporary highs; we have to be ready for extreme volatility.

The market has followed through to the downside with the DOW sliding over 900 points, risk currencies declining, and the JPY powering up reflecting a true risk-off sentiment.  Risk off means movement in JPY and CHF.

Additionally it’s important to note that crypto-currencies did not receive a bid during the latest, big risk-off event; confirming that these speculative assets are sold in times of uncertainty to raise cash out of fear or greed.

The winners of the day will be those who don’t get emotional about the big market swings and stick to their money management model….always.

To be successful, think dynamically and understand the correlations among financial markets.  Tunnel vision on one specific asset class no matter the market cycle is not true objective analysis.

For me, this month I am closely watching correlations, commodities and balancing my portfolio out with metals while I search for an auditor to update the gains to my track record for 2017.


Author: Alexander Zhang's Blog

The ocean is my home, although I don't miss living on a ship! Risk Manager & Author from San Francisco.