VIX Volatility Model - Update 6-24-16

Published : June 24 2016 at 8:49 ET

The VVM stayed on its sell signal as it is mechanical so does not try to anticipate outcomes. That said, I note that some of you took profits yesterday at and after the close when XIV spiked higher. As we have said, partial or full profit taking in these markets whether in stocks or ETFs is not a bad move. Position sizing is inherently unique to each investor as it should closely match one's personal risk tolerance levels which includes when to take partial or full profits. 

While the surprise outcome in the UK shocked markets, keep in mind that the Brexit process is a lengthy one. Please read today's PMP for more details. 

As for VVM, one could elect to sell part or all of their position at the open.

Alternatively, one could keep part or all of their position and ride through the volatility as such sharp drops usually experience upside moves. Further, global markets may have ridden out the storm, having found floors, especially in Asian markets such as in Hong Kong and in China which were off only a couple percent after being down a lot more earlier in the trading day. 

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