Volatility comes in all shapes and sizes. It affects every stock, every market, and every asset class, everywhere around the world.
It can be your best friend or your worst enemy.
Either way, as Sun Tzu said, “Keep your friends close and your enemies closer.”
But whether or not volatility is your enemy today, tomorrow, or next week, you have to know how to manage volatility in your trading.
Today, I’m going to show you why you have to embrace volatility, and how to see it coming.
Then, I’m going to show you something so hot right now – it’s strictly off-limits for me to talk about anywhere else (I’ll probably get sued for it, but I don’t care)…
With everything the stock market’s dealing with, the most cumbersome and potentially dangerous thing it’s facing right now, which could break the market’s back, is increasing correlation.
Correlation is a simple phenomenon. It’s when different markets, different asset classes start acting the same and moving together.
When correlation picks up in a bearish environment, meaning more different asset classes start moving down together, something very bad can happen.
We’re not in a bear market. Not yet. But we could get there – several asset classes could get there quickly.
That’s my biggest fear right now.
Now, the stock market is in a dicey position, to start with.
All the leadership stocks, principally the FAANG stocks, that propelled markets higher for years, have all rolled over. Several of them are already in bear markets.
A correction is a 10% move down from a recent high, or an all-time high. A stock enters a bear market when it falls 20%.
Here’s what you should be watching out for…