Chaos.
That’s what we’ve seen over the last several weeks.
Not even a month ago, on June 27, President Joe Biden delivered the worst debate performance in history.
Calls for him to quit the race began to get louder.
Just two weeks later, on July 13, former President Donald Trump survived an assassination attempt at a rally in Pennsylvania.
Eight days later, on July 21, President Joe Biden announced he was dropping out.
Twenty minutes later, he endorsed Vice President Kamala Harris.
In less than a month, we’ve witnessed four historic events, one right after the other, in what was already the most contentious election we’ve ever seen.
Like I said, chaos.
And as we’ve been talking about here at Patterns & Profits, volatility is following suit.
Back on July 5, Volatility was down as low as 12.35 as measured by the CBOE Volatility Index (VIX).
This morning, the VIX spiked as high as 19.36 – that’s a 56% pop in just 20 days.
Now, as I’ve said countless times over the last few weeks: as traders, we love volatility.
If you watch the financial media, you might get the wrong idea about volatility – that it’s something to be feared (they call the VIX the “fear gauge,” for instance).
But volatility is a measure of uncertainty – sure, the higher the VIX, the more likely it is that stocks are going to make a move.
But we don’t know if that’s a move up or a move down. That uncertainty causes selling as traders take profits off the table… which could lead to higher volatility and even more selling…
So with volatility roiling markets right now, I wanted to answer a question that always comes with higher volatility…
Can we predict – and profit – from the chaos?
Volatility is a tricky thing to predict, for sure. You’re literally trying to predict unpredictability.
That said, there are ways to predict long- and medium-term volatility.
I’ve recorded a short 10-minute video on how traders can predict spikes in volatility – and more profitable trades.
Just click below to watch now…
Good trading,
Tom Gentile
America’s Pattern Trader