It’s been one hell of a hellacious week in the market, and investors are still reeling on how to predict the random stock movement caused by obvious, rampant inflation.
We saw the Federal Reserve on Wednesday say things like “we’re progressing and seeing progress on inflation,” and how it’s “not even thinking about thinking about raising rates.”
What does that even mean?
It’s absolute nonsense. All the Fed is doing is tiptoeing around the giant pink elephant in the room that is inflation.
Guys, I hate to break it to you but inflation is everywhere.
You can feel it when you try to buy a car, a house, rent an apartment, fill up on gas and even when you try to buy chicken.
But then you have the Fed saying there’s not much of a chance of raising rates just yet — leaving its benchmark rate steady at 0% to .25%.
And this message the Fed is putting out about inflation not running rampant in the markets has created a huge instability that is spreading throughout Wall Street…
We saw the yield curve take a huge dip after Wednesday’s Fed announcement, and there’s been a big rotation of money flowing out of reinflation trades into growth stocks.
Since every aspect of the market is reacting in such a turbulent and treacherous manner, all investors want to do is learn how to predict stock movement today so they can save themselves a headache tomorrow.
And I’m looking at two things right now that can help traders predict next week’s major stock moves.
First, I like to look at the Barclays iPath Series B S&P 500 VIX Short-Term Futures ETN (BATS: VXX) chart — which is built to reflect the VIX by tracking its short-term contracts.
The VIX, or volatility index, is the best-known market gauge of fear, and it offers key insight to how investors view the markets.
The VXX has had huge pressure applied to it lately — making new lows in May and June — while the VIX spiked in May.
And I’m starting to notice a profitable pattern beginning to emerge between the two that usually doesn’t happen…
You see, if the VIX continues to move the way it has been, then the VXX is about to deliver us a near 50% return trading opportunity next week.
And the VIX isn’t the only thing handing out clues to predict next week’s stock movement…
Check out our short video below to learn more about how to predict stock movement by analyzing two sections of the market. Be sure to share your thoughts in the comments section below.
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