Wednesday, May 18, 2016

Another Day, Another Whipsaw.....05.18.16

Another wild ride today as traders are once again hedging bets on a June rate increase by the FED.
Keep in mind that the markets are under manipulation greater than usual by the HFTs and we are now operating in an environment where bearish sentiment is rising in both equities and bonds with the anticipation of a washout that will sink all ships. This sentiment follows the recent Ponzo chart updates showing the decoupling of the normally divergent equity/bond relationship and just in case you haven't been through once of these volatility churns before, they tend to end badly for the bulls.
While delta neutral remains our Plan A for navigating the present risky milieu, MVP is our emerging Plan B and work continues to make the model robust and highly linear.
Below is MVP's view of XLU as of today's close.
Keep in mind that risk containment is our primary objective and this weekend we'll post a basket of MVP studies examining where it's strong and where it's weak.