How To Profit From Rising Market Fear [Credit Suisse AG – VelocityShares Daily 2x VIX Short Term ETN, iPath S&P 500 VIX Short-Term Futures ETN]

VIX Fear IndexGeorge Leong: We are seeing some extreme nervousness building up around the stock market as investors scramble to the exits, fearing the next big market collapse is upon us.

The anxiety level is high, as indicated by a surge in the Chicago Board Options Exchange (BOE) Volatility Index (VIX), but the world isn’t coming apart, as many investors and analysts are thinking. There will, however, be some turbulence in the weeks and months ahead, as I said in my annual assessment back in January.

With the easy money flow starting to decline after the Federal Reserve announced its second straight $10.0-billion slash from its monthly bond buying at its FOMC meeting last week, it’s not a surprise to see fear in the stock market rising.

We all knew the easy money made in the stock market in 2013 was an aberration and was artificially driven by the central banks of the world; we all knew that this year would be more difficult.

Look, we are not going to see 20%–30% gains this year in the stock market. Instead, as I sit here and look at my screens, what I see is a buying opportunity emerging in the stock market. As long as the economy continues to advance as indicated by the fourth-quarter gross domestic product (GDP) growth of 3.2% announced last week, I’m encouraged.

As I discussed in previous commentaries, I want the stock market to return to some degree (even just a smear) of normalcy in which gains are based on the underlying fundamentals, and less on the Fed.

Pages: 1 2

Leave a Reply

Your email address will not be published. Required fields are marked *