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How to Tell a Good Selloff From a Bad One, With Vecchio and Spivak
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ticker lesson
Breakdown
0:00lesson
Sell-offs — good vs bad
- Two kinds of sell-offs: good (profit-taking) vs bad (panic)
- Good sell-off: traders take profits after a good run
- Bad sell-off: signs of contagion and liquidation
- Gold selling off indicates bad sell-off
- Micron employees dumping assets into stock/bond markets
1:45lesson
Identifying market scares vs bigger trends
- Watch volatility indicators: VIX, VVIX, vol of vol
- Vol of vol should not increase
- Monitor credit markets: JNK, HYG
- Dollar remains tight despite recent weakness
- Euro down 0.23% despite strong performance
3:35lesson
ECB's impact on euro and credit markets
- ECB's next week statement could contain spreads
- If no action, euro gets crushed
- If action taken, euro bounces and credit markets stabilize
- Euro hasn't sold off in 2 weeks
- General dollar move affected other currencies
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