{"id":22247,"date":"2024-10-29T07:30:02","date_gmt":"2024-10-29T11:30:02","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=22247"},"modified":"2024-10-29T07:30:02","modified_gmt":"2024-10-29T11:30:02","slug":"the-right-ingredients-for-a-chaos-period","status":"publish","type":"post","link":"https:\/\/stage.jeffclarktrader.com\/market-minute\/the-right-ingredients-for-a-chaos-period\/","title":{"rendered":"The Right Ingredients for a Chaos Period"},"content":{"rendered":"

Managing Editor’s Note:<\/strong> The election is right around the corner… and it’s bringing volatility with it. Several key catalysts are sending us into what market wizard Larry Benedict calls a “chaos period.”<\/p>\n

That’s when he says we could see sharp market swings that keep everyday investors’ portfolios subdued… for years, potentially.<\/p>\n

That can be devastating to anyone near retirement. And if you’re a buy-and-hold investor… watch out. You can hold through the swings… and still see your portfolio stagnate.<\/p>\n

That’s why Larry is holding his Countdown to Chaos<\/em> event to give you time to prepare.<\/p>\n

Tomorrow, Larry will explain the troubling ingredients coming together… and his blueprint for profiting when chaos hits.<\/p>\n

Reserve your spot with one click right here<\/strong><\/a>, then read on for how this troubling mix is brewing for the markets…<\/p>\n

\n

I’m no stranger to chaos in the stock market.<\/p>\n

My 40-plus years of trading have spanned some of the worst crashes and bear markets in history.<\/p>\n

I traded through the infamous “Black Monday” crash in 1987.<\/p>\n

I navigated my hedge fund through the early 2000s’ dot-com bust and 2008’s financial crisis. Each saw the S&P 500 cut in half.<\/p>\n

That means I know when the ingredients for a surge in volatility are mixing together.<\/p>\n

Things may appear calm on the surface for now.<\/p>\n

But when certain metrics start picking up, another chaos period is incoming…<\/p>\n

Volatility Creeping Higher<\/h2>\n

The CBOE Volatility Index (VIX) is a popular tool for traders. It reports expected volatility in the S&P 500.<\/p>\n

Many refer to it as Wall Street’s “fear gauge.” That’s because the VIX usually jumps higher when the S&P 500 pulls back.<\/p>\n

Daily price movements pick up when the stock market is selling off. Conversely, the VIX tends to be the lowest when stock prices are steadily grinding higher.<\/p>\n

But there are two reasons to expect the VIX to pick up soon.<\/p>\n

First, this is a time period when volatility picks up historically. If you plot the average volatility for the S&P 500 by month, it bottoms in July and increases through October.<\/p>\n

Another reason has to do with the election cycle. Look at the chart below:<\/p>\n

\"chart\"<\/p>\n

(Click here to expand image)<\/a><\/p>\n

The chart looks at the VIX during past elections (when the economy hasn’t been in a recession).<\/p>\n

The VIX starts trending higher about a month before elections. Then it really picks up steam inside the final two weeks.<\/p>\n

That makes the recent move in the VIX all the more interesting. It’s been trending higher since the end of September.<\/p>\n

And if we’re about to see the VIX surge into the elections, one chart in particular should provide a warning…<\/p>\n

An Indicator for Market Meltdowns<\/h2>\n

There’s another volatility measure you should be watching. But it doesn’t get much attention.<\/p>\n

This measure tracks the volatility of the VIX itself – the CBOE VIX Volatility Index (VVIX).<\/p>\n

VVIX often serves as a leading indicator for the VIX itself. It tips where volatility levels could be heading.<\/p>\n

In fact, VVIX warned of the early August flash crash. It jumped to the highest level of the year just before<\/em> the S&P 500 went on to fall 5% in two trading sessions.<\/p>\n

And VVIX is giving us a pattern to monitor… Take a look at the chart below:<\/p>\n

\"chart\"<\/p>\n

(Click here to expand image)<\/a><\/p>\n

VVIX has stayed elevated since the spike higher in early August. And since September, it’s begun making a triangle pattern, marked by the trendlines.<\/p>\n

When a triangle pattern forms, you can imagine pressure building… So it’s important to watch for breakouts amid the coiling action…<\/p>\n

Right now, the upper dashed line on the chart gives us a key level to watch. A breakout over that trendline would signal more volatility on the way.<\/p>\n

So keep a close eye on VVIX.<\/p>\n

A jump above the 120 level would warn that election-cycle volatility is arriving right on time…<\/p>\n

Regards,<\/p>\n

Larry Benedict

\nEditor, Trading With Larry Benedict<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The election is right around the corner\u2026 and it\u2019s bringing volatility with it.<\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-22247","post","type-post","status-publish","format-standard","hentry","category-uncategorized","publication-market-minute","person-jeff-clark"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/22247","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=22247"}],"version-history":[{"count":0,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/22247\/revisions"}],"wp:attachment":[{"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=22247"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=22247"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=22247"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=22247"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=22247"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=22247"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=22247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}