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Pain — No, this is not an introduction to a revised edition of 50 Shades of Grey. Pain is probably what your portfolio is feeling, at least in some shape or form.
Interestingly the sell-off that we are living through, Apes, is historical. We haven’t seen such a prolonged pullback since the financial crisis that sparked the great recession. Some of the most beloved companies have watched trillions in collective market cap evaporate in the last few weeks.
When you couple the sell-off in equities with moves in crypto and the bond market, I start to think of one thing: capitulation.
So when will we bottom? Did it already happen? Or do you dare try and catch a falling knife? Well, important indicators for capitulation are the two V’s: volume and volatility. When you watch a huge volume surge and a volatility spike, that’s a decent indicator of capitulation.
Inflated valuations aside, when the VIX is between 30 and 35, there are usually a ton of sellers of volatility at those levels. However, we’re not seeing that just yet when it comes to derivative volumes.
I’d argue that we’re not at the bottom yet, but it’s definitely a trader’s market. There’s a chance to be a bull somewhere, Apes. Good luck!
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