Thursday, May 19, 2016

Crosswinds of Uncertainty Prevail....05.19.16

Are we arriving or departing from the "new" volatility paradigm?  Time will tell but in the meantime swing traders are scratching their heads trying to find an edge, as are some big bank trading desks..
Re yesterday's comment on archaic fund regs, here's a background article on the topic. Personally I would NEVER buy another mutual fund, the buy/sell constraints are just too high risk and the management fees are often far in excess of ETFs with similar portfolios. IMHO.
Here are the MVP studies for QQQ and QLD (the x2 leveraged QQQ ETF).  We'll be looking at a whole basket of stocks and ETFs this weekend and the more I play with this concept the more appealing it looks...vested less than 50% of the time, highly correlated comparative studies to confirm the volatility skew, a limit stop to control whipsaws and a trailing stop to preserve gains.
SO...based on the 2 models shown below, which would you trade?  This weekend we'll discuss it.
Click once on each chart to enlarge and then ESC key to revert.