ETF Periscope: Contrarians Should Take Notice of Davos Highs, VIX Lows
Courtesy of Daniel Sckolnik, Sabrient Systems and Gradient Analytics “ Those who dare to fail miserably can achieve greatly. ” -- John F. Kennedy According to multiple reports in the business media, the scene at Davos, Switzerland, home to the annual gathering of the World Economic Forum, appears to be more upbeat than during the last few years. It’s probably not about the skiing. In spite of slow growth trends in the U.S., an ongoing recession in the Eurozone, and International Monetary Fund projections of weak global growth emerging from International Monetary Fund reports, Wall Street is seeing key indices hitting close to record highs. In addition, among the S&P 500 companies which have reported earnings to date, over two thirds surpassed expectations. This sort of thing often tends to put the financial glitterati into an upbeat mood. Of course, it is all relative, as the last few years have provided multiple opportunities for the world’s key financial players to dwell on the downbeat side of things. So perhaps the optimism is more a sigh of relief that the Eurozone seems to be containing any new signs of contagion, China is experiencing more of a soft than hard landing, and the Middle Eastern hot spots aren’t rattling the global markets in knee-jerk fashion. Retail investors are taking note of the happy-face being put forward by the economic press that, indeed, it may be safe once again to get back into the Wall Street waters. To add a respected indicator into the mix, the CBOE Volatility Index, almost always referenced as “the fear gauge,” borders close to a six-year low. This indicates that investors are of the sentiment that, at least in terms of the investment landscape, things are relatively stable. Somewhere, contrarians are plotting their move. Just about every investor who has read up on Wall Street history has come across the legend of how, back in 1929, Joseph P. Kennedy figured it was time to exit the market when his shoeshine guy offered him the lowdown on the hot stocks to get into. Something to consider, if you are indeed considering jumping aboard the current bullish uptrend. Also worth considering: taking advantage of that low volatility. You could do this by adding some volatility insurance to your portfolio in the form of a VIX derivative, such as the ETF VXX. While something of an imperfect volatility vehicle, VXX…

Courtesy of Daniel Sckolnik, Sabrient Systems and Gradient Analytics

Those who dare to fail miserably can achieve greatly.”  -- John F. Kennedy

According to multiple reports in the business media, the scene at Davos, Switzerland, home to the annual gathering of the World Economic Forum, appears to be more upbeat than during the last few years.

It’s probably not about the skiing.

In spite of slow growth trends in the U.S., an ongoing recession in the Eurozone, and International Monetary Fund projections of weak global growth emerging from International Monetary Fund reports, Wall Street is seeing key indices hitting close to record highs. In addition, among the S&P 500 companies which have reported earnings to date, over two thirds surpassed expectations.

This sort of thing often tends to put the financial glitterati into an upbeat mood.

Of course, it is all relative, as the last few years have provided multiple opportunities for the world’s key financial players to dwell on the downbeat side of things. So perhaps the optimism is more a sigh of relief that the Eurozone seems to be containing any new signs of contagion, China is experiencing more of a soft than hard landing, and the Middle Eastern hot spots aren’t rattling the global markets in knee-jerk fashion.

Retail investors are taking note of the happy-face being put forward by the economic press that, indeed, it may be safe once again to get back into the Wall Street waters.

To add a respected indicator into the mix, the CBOE Volatility Index, almost always referenced as “the fear gauge,” borders close to a six-year low. This indicates that investors are of the sentiment that, at least in terms of the investment landscape, things are relatively stable.

Somewhere, contrarians are plotting their move.

Just about every investor who has read up on Wall Street history has come across the legend of how, back in 1929, Joseph P. Kennedy figured it was time to exit the market when his shoeshine guy offered him the lowdown on the hot stocks to get into.

Something to consider, if you are indeed considering jumping aboard the current bullish uptrend.

Also worth considering: taking advantage of that low volatility. You could do this by adding some volatility insurance to your portfolio in the form of a VIX derivative, such as the ETF VXX.  While something of an imperfect volatility vehicle, VXX…
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