A sudden risk-off panic

The markets opened with a risk-off tone overnight in Asia, The selloff continued in Europe, and now it is in North America. The talking heads on television have attributed the weakness to COVIE-19 jitters over the spread of the Delta variant.

Panic is starting to set in as the S&P 500 approaches a test of its 50 dma. The term structure of the VIX futures curve is starting to invert. The 9-day VIX is now above the 1-month VIX (bottom panel), though the 3-month VIX remains above the 1-month VIX. 

Coincidentally, I also received this morning several emails raising concerns about the stock market. I would argue instead that this is not a time to abandon long positions. Instead, the market weakness represents an opportunity to tactically add to long positions.

The full post can be found here.