Daily Market Snapshot
|More slow grind to the upside|
|A change from green to yellow is an indication|
that investors are beginning to get a little skittish.
No big alarm yet, they've just been a little more cautious
the last couple days.
When investors start getting nervious about the market's prospects they begin buying protective options, a form of insurance against possible market declines.This activity can be tracked via the VIX Index, the volatility index.
The earliest indication of a change of sentiment amoung investors is a rise in the VIX or TVIX in this case.
TVIX is a 2x leveraged ETF that rises dramtically when fear starts to take hold of market participants. Big spikes in the TVIX are a very good indication of trouble ahead.
It is still too early to tell if this TVIX rise is telegraphing a pullback in the market, but it is worth paying attention to. The market has staged a nice low-volatility rise for the last few months and many have been anticipating a correction. Is a correction iminent? Maybe.
I bought TVIX for my personal account the day before yesterday; at the same time I bought it's unleveraged sibling VXX (the VIX related ETF) in the GWM Long/Short Folio. These are very short-term positions used to hedge our model portfolios against potential market declines.
The TVIX ETF is only suitable for the Go-Getter Model because it is extremely volatile; It was up about 10% today. VXX is a bit more tame; it was up about 5% today. As I write, futures are indicating a lower open tomorrow. If these little firecrackers pop tomorrow I may take some profits - we will see.