Correlations That Count

But small stalks in the sun
speak a harder truth—
everything unwilling to change will die,
everything that changes only dies a little

–Ray McManus, from Red Dirt Jesus

Feeling comfy with a 401k full of stocks? Might do to chew on this piece of information: The Vix (Volatility Index), commonly called the fear index, measures the expectations of traders for volatility in the market over the next thirty days. The higher the number, the greater the fear of loss. The importance to investors is this: Extreme high numbers come at buying opportunities, when nobody wants to have anything to do with stocks. And, with supreme illogicality, low numbers come when the worst thing to do is to hang on to a portfolio of stocks.

This is such a time. The Vix just dropped below 10 for the first time since the last market top in 2007. See below:

Of course, anything can happen, including a lower number on the Vix and new highs in the market. In fact, that is what I’m expecting. But the Wave count strongly indicates that, after the top is in, the ensuing bear market will be more severe, fall much further, and last longer than the ’07-’09 crash.

What to do? You decide, friend.


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