Fear and Panic

10/25/2018 11:55 AM

Dear Friends,


Below is a daily 2-year chart of the S&P 500 index in the top window, the VIX index is in the bottom window.

The CBOE Volatility Index, known by its ticker symbol VIX, is a popular measure of the stock market's expectation of volatility implied by S&P 500 index options, calculated and published by the Chicago Board Options Exchange (CBOE). It is colloquially referred to as the fear index or the fear gauge. (source: Wikipedia)

The good news:

  • Panic selling has occurred in the past few days, notice the spike in the VIX to the 25 level (blue line in the bottom window)

  • We saw that spike to 25 or greater in the VIX at the bottom of February and March corrections

  • From this gauge, perhaps the selling is nearly over

  • At the time I write this, the S&P500 index is up +41 at 2697.76 – that’s good news -- as we are currently holding above the 2692 support (yellow horizontal line below)

The bad news:

  • Yesterday the S&P 500 index closed below major support of 2692

  • That’s a bearish sign, if we fail to hold 2692, the next closing level of support is 2581, the closing low of February 8, 2018, about 4% lower from the current prices

What should you do?

  • Nothing – that’s a decision to stay the course

  • Dial down on your equity %

  • Dial up on your equity % -- or invest idle cash (that’s what I have been doing with my own money)

Call us with any questions – 800-578-3181x0

Founded in 1992, Jackson Wealth Management is an independent, fee-only investment advisor. Founder George P. Jackson has been the CEO/CIO of the firm since its inception with the goal of delivering value to his clients and his associates. 

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Jackson Wealth Management, LLC is not affiliated with Triad Advisors, LLC.

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