VIX Volatility Model and Market Direction Model - Update 6-24-16

Published : June 24 2016 at 9:49 ET

We mentioned how buying the open may be a potential strategy given various points laid out in today's PMP.

Further adding to the case that markets will find a floor possibly today:

The Bank of England will act to aid bank liquidity which includes cutting rates further. Of course, we can expect coordinated action on behalf of central banks as they move lockstep with global easy money policies pushing rates further into the red, and pushing the world closer to the 40th day (ref Seykota's "Govopoly in the 39th Day"). 

That said, the EU realizes they need the UK, and probably wish to prevent any further economic fallout. So while negotiations will be intense, the UK is likely to remain a member of the European Economic Area and essentially keep access to the European common market, similar to the arrangement the EU has with Norway.

That said, the EU's days are numbered. Other countries within the EU can be expected to hold referendums of their own as a domino effect may occur in the next year or two. This is clear sign a cleansing process of great magnitude has begun as this is by far no isolated event. The sharp acceleration of civil unrest across numerous countries is being seen and felt via news blogs and other alternative media sources. The internet indeed has been a great equalizer in bringing truth to those who wish to do their own due diligence to separate the kernels of truth from the manipulative lies put forth by big media, big business, and big government.

Expect elevated levels of volatility at least over the next 12-24 months as a result of the fast diminishing confidence in our governments. While bad for the world, it is necessary in the long run as a global cleansing of sorts is drastically needed. And it is also potentially good for the models, especially the VVM, as it has thrived in every period of elevated chaos including 2000-2002, 2008, the flash crash of 2010, and post S&P downgrade of US bonds in August 2011. 

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