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Saxo Bank has a few

Naturally, predictions like this are more for bank PR than education but they have some value.

For one, they're a reminder that unexpected, huge and unpredictable moves happen in markets. And they happen far more often than we expect.

The thing is, they usually happen somewhere you least expect.

As for this set of predictions, let's hope this trader is you (from the report):

"World markets are increasingly full of signs and wonders, and the collapse of volatility seen across asset classes in 2017 was no exception. The historic lows in the VIX and MOVE indices are matched by record highs in stocks and real estate, and the result is a powder keg that is set to blow sky-high as the S&P 500 loses 25% of its value in a rapid, spectacular, one-off move reminiscent of 1987. A whole swathe of short volatility funds are completely wiped out and a formerly unknown long volatility trader realises a 1000% gain and instantly becomes a legend."

Courtesy of ForexLive

“Low volatility could be ‘the quiet before the storm,’” Nobel laureate Robert Shiller told CNBC last week, adding: “I lie awake worrying.” Over the past 20 years, the CBOE Volatility Index (VIX) has closed below 10 on only 21 days, 13 of which have been in the past two months. The current streak of 270-plus days without a 5% drawdown in any of the major U.S. indices is the longest since 1996. Meanwhile, U.S. equity values continue to diverge from earnings — Schiller’s Cyclically Adjusted PE Ratio (CAPE) has only been higher two times in market history: 1929 and 2000.

With the “FANG” trade getting long in the tooth, so to speak, Wall Street analysts are now scrambling to formulate new acronyms to accommodate the most robust names in Big Tech today. FAANG, FAAA, FAAMG and now FANTASY have been brought forward adding companies like Microsoft, Tesla and Nvidia to the original FANG Fab-Four of Facebook, Amazon, Netflix and Google.

As market warning signs so, they don’t get better than this. Widely accepted market acronyms don’t evolve gracefully. They pop. Remember the BRICS (Brazil, Russia, India and China) and NINJA loans – (No income, no job)?

What most investors miss is that universally understood and enthusiastically embraced acronyms reflect peak sentiment. They are a market narrative boiled down to its most simplistic and easiest to grasp form. Repeated over and over and appearing everywhere, they are cognitive ease at its best. Like pieces of sea glass, all of the rough edges have been worn away over time and everyone can hold them.

In my book

This article came to me from member Drew and I think it's a name you need on your watch list.  Volume is great and who doesn't love 4x the SPX.   Read on........

A recent article asked the following questions,

1. If you could only own one company in your portfolio, which would it be? Why?

2. If you had $25,000 to invest today on one company and you planned to hold it for 10 years or more, which company would you buy? Why?

For years, my #1 favorite stock in the world has been the Credit Suisse AG - VelocityShares Daily Inverse VIX Short-Term ETN (NASDAQ:XIV). It has returned almost four times the S&P 500 (NYSEARCA:SPY) total returns.

It is my favorite stock in the world... or my favorite security trading on a stock exchange (since it is not, as many will be quick to point out, a stock. It is an exchange traded note).

Other than expected value, what factors impact your investing decisions?

I always ask that question in search of non-economic counterparties. In late 2012, I found that,

According to Ashraf Laidi:  The following sobering analysis on the S&P500 reinforces our expectations that recent record highs in US equity indices will not be revisited before at least six weeks.

A decline of at least 10% is expected to follow.

-        Last week’s 3.6% decline in the S&P500 single-handedly erased all of the prior seven weeks’ consecutive gains.

The last time the S&P500 erased at least three weeks’ of consecutive gains was the week after the October 2007 record. Stocks fell more than 50% thereafter and took six years to regain that high.

-        And for an unprecedented finding, last week’s S&P5 500 decline took place after SEVEN weekly consecutive gains, which had NEVER been seen before in the index.

Seven consecutive weekly gains have occurred in the past (Aug-Jul 1989, Aug-Sep 1993, Apr-May 1997, Feb-Mar 1998, Dec 2003-Jan 2004, Apr-May 2007, Mar-Apr 2009, Dec 2010-Jan 2011, Jan-Feb 2013), but never in any of those cases has the streak-breaking week fallen by more

In early October, I pointed out that the Russell 2000 (IWM or $RUT) could be forming a bullish butterfly pattern, having found buyers off of the 20month SMA.  (See here) 

Well so far so good and I'm calling it's recent consolidation a bull "flag" due to no significant breakdown in the other three indexes, nor semiconductors.

Friday we saw banks and broker/dealers make a nice reversal higher after comments were made, that while the ECB is not easing "now", they will be preparing a QE plan for their January meeting.  The U.S. 10 year popped and the banks/brokers followed in suit.

Small caps also typically outperform large caps going into the end of the year.  While the stronger US dollar may weigh on them longer term, I still believe Santa will not leave them off his "nice list" this holiday season.

While much of the equity market is extended, banks still have room to run and I feel small caps will rip to the upside and I hope to see them lead.  My next $RUT target $1300.  Stop below

Many eyes are watching the VIX as it has not decayed recently and made another new low.  This holding pattern could be due to concerns over Russia possibly invading the Ukraine (who believes them when they say "nyet"), concerns over lackluster earnings, the dreaded "taper", fear of rising rates and a long-in-the-tooth bull run. 

Looking back over recent history, the VIX did a similar basing in the Spring/Summer of 2013 when each month, there seemed to be a "fear" the Fed would announce removing their foot from the QE gas pedal during their FOMC meeting.  18 Italian banks being downgraded just poured more fuel on that short term fire spiking it even higher.  Of course, the market recovered but there seems to be much more going on behind the curtain at this point.

To quote Marvin Zonis from last weeks CBOE Risk Management Conference, "“We are in the age of major, major political risk.”  Not only is taper on people's minds, but larger geo-political concerns are out there as well such as

Lazlo Birinyi and his associates recently completed a study of the VIX. Their conclusions were that the VIX is not a very good indicator of future market movements. Instead, it is simply a mirror image of current market conditions. Their conclusions prompted me to look at the VIX over the past twenty years. Truth be told, GT made me do it. LOL He brought the study up in chat and challenged me to back up any argument for or against with real statistics. Always good advice...

First, let me state that I agree with Mr. Birinyi's conclusion. I overlayed a chart of the S & P 500 on a chart of the VIX from 1990 to present. At least on the surface, it even looks like a mirror image. Granted, I do not have the time nor the inclination to replicate his study methods. Anecdotally at least, it looks like he is on to something.

Next, I became curious if the VIX had any other uses outside of options strategies or if there was a VIX trade with a high probability of success. Looking at the charts as wel