Trading noise, the random movement of price over the short term, does not control trends, cycles, and profits. The
majority, an emotionally driven group focused solely on price, often interprets it as meaningful information. This leads to confusion, frustration, missed opportunities, and leaves the majority as the
bag holders of trend transitions. The
Evolution of the Trade helps investors stand separate from the majority.
VIX's overall trend, revealed by trends of price, leverage, and time, are defined and discussed in
The Matrix for
subscribers.
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Adam Smith acknowledges the delicate interplay of countless individual actions and interactions by stating that "The uniform, constant, and uninterrupted effort of every man to better his condition...is frequently powerful enough to maintain the natural progress of things toward improvement, in spite both of the extravagance of government, and of the greatest errors of administration" (The Wealth of Nations, Book IV, Chapter II). This quote captures Smith's recognition that even in the face of unexpected events, such as governmental missteps or administrative errors (fiscal or monetary), the collective pursuit of self-interest directs the flow of capital, investment, and economic growth.
The Fed's decision to pause interest rate hikes, while remaining "hawkish" is beginning to release energy into trends that the majority does not recognize. The Volatility Index (VIX), an inverse play on stocks, is one of them.
The majority views the VIX as oversold (too low), thus, implying stocks are overbought. Remember, the majority never gets timing right, and frequently get caught holding the bag.
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Stocks bulls should be paying attention.
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