Hey, Ross here:
The S&P 500 is currently down about 6% from its high.
That’s not even a correction (10% drawdown) – let alone a bear market (20% drawdown).
But as today’s chart shows…
Nearly 40% of the index is already in a bear market.
Chart of the Day
Take a look at the chart above.
It shows non-dealer VIX futures positioning – essentially, how heavily large asset managers are positioned for or against a rise in market volatility.
When the bars are below zero, they’re net short volatility.
That means they’re positioned for calmer markets.
When the bars move above zero, they’re net long volatility.
That means they’re either betting on – or at least hedging against – a pickup in volatility.
And right now, you can see that positioning has flipped sharply higher.
They’re net long volatility at a level unseen in many months.
This is how the “smart money” is currently positioned in volatility – they’re expecting more of it, much more.
What does that mean for us?
I explain below.
Insight of the Day
There are big opportunities in targeting the stocks that are bottoming ahead of the market.
The dispersion effect I talked about above – the winners holding up the index – would seem to suggest we should be targeting the winners.
If the trend was back upward, then yes – I would prefer to target the winners.
But right now, the broader trend of the index is still downward.
Which means there are big opportunities in targeting the stocks that are bottoming ahead of the market.
Remember, just like how certain stocks break out ahead of the market in an uptrend, others will bottom ahead of it in a downtrend.
Now there’s a caveat.
It’s far easier to identify stocks that are breaking out ahead of the market than the ones bottoming out ahead of it.
That means we can’t use the same strategies for identifying both groups of stocks.
Tomorrow morning, I’ll be sharing a little something on my top “bottom picking” strategy.
Make sure you keep an eye out for that.
In the meantime, if you want to watch me break down a stock that could have 50% upside (if you get in quickly)…
Customer Story of the Day
“I’m not someone that usually leaves reviews, however, if I could give more stars I absolutely would!
I am currently enrolled in two of their courses. I knew NOTHING about the stock market when I joined back in March after seeing Ross on The Cartier Family YouTube Channel.
Ross and Jean have rather quickly taught me how to navigate the market. They are so patient with ‘newbies’ like me and have eagerly answered my questions with demonstrations.
I would highly recommend this down to earth and knowledgeable team to anyone that is on the fence about joining. Just take the leap and watch your wallet grow!”
Ross Givens
Editor, Stock Surge Daily
