[edit] In this case by “risk-on, cyclical” I mean broad stocks. Commodity “catch-up” plays could be their own animal in the late stages, and gold stocks are counter-cyclical in their best suit. Both, but especially gold stocks, could perceive positives in a re-weakening Fed, as they originally got hit hardest as the Fed began to hawk in 2022.
In light of the divergence to SPX we reviewed in NFTRH 831 I am very intolerant of risk (as if there were not already enough risk indicators in play).
That means taking some profits, and in a couple Semis added recently, likely taking/limiting losses. It means any aspect of the cyclical, risk-on market can be sold in favor of safety. The VIX/SPX divergence is just one indicator, but it is a concerning one and I am not going to wait for the election to further manage risk (it was a rough time target, anyway), if VIX resumes strengthening.
Here is what the nominal VIX is doing today. If it continues to look like it wants to break the bullish looking flag (bearish for markets) then I’ll do more selling (I already took a profit in NVDA in the taxable account). I’ll try to let the day play out a little, but my tolerance is very low for any sort of risk in the risk-on, cyclical markets.
