Excerpt from Reuters quoting DataTrek co-founder Nick Colas:
…. “Co-founder Nicholas Colas is watching for a one-day S&P 500 decline of 3% or more – unheard of in 2019 or early 2020, of course until Feb. 24th’s 3.4% drop.
Colas saw that as a sell signal, because along with the benchmark’s move the CBOE volatility index (.VIX) closed at 25 – statistically too low. So far in 2021 we’ve had no 3+% down days.
Colas suggests buying on 3% down day ONLY if the VIX closes well above 44 that day, or preferably above 52.
If the VIX isn’t at those levels Colas says: “it’s better to be a seller on such a day than a buyer.”
“Even if you don’t like this approach, consider developing a game plan for if markets get truly choppy,” he says”….
Read the full article here on Reuters!