As I took a week of vacation with my family to Kauai I see the world hasn’t really changed but the perception certainly has./p>
Should we be surprised by the selling this week?
I’m not sure, after all the markets are still up strong for 2013 and there is half a year left! Perhaps the Russell Rebalance or the end of the quarter has motivated some to lock in gains. I get that!
I’ve said it many times, there are a million reasons to sell but only ONE reason to buy.
Did the Fed shock everyone this week? Not really, but those who try and front-run the Fed will cause angst/fear in the investing community because of the unknown. Frankly, that is normal – the Fed will work off the incoming data and adjust their program accordingly — but that plan never changed, only the perception from an investor’s point of view.
Other areas of ‘worry’ that seem to be a bother include China, which has been trying to engineer a slower landing and Japan, which with their aggressive purchases have people wondering what they are doing. So, the fear gauge has risen to multi-year highs, Thursday was the biggest rout seen in nearly six months, the VIX climbing into the 20’s for the first time this year.
TRADING
For me, I will be selling the high volatility spikes via put spreads as much of the worry is misplaced fear.
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