The VIX ETF I alluded to in my last blog post is UVXY. It is leveraged 2x the inverse of short term VIX futures. Strictly speaking, "Black Swans" are unanticipated. The crash-like behavior of stocks markets was anticipated by many, but not the instantaneous velocity of the decline. I took a two day gain of 58% on UVXY! I had entered the trade with the Scottish method sell signal on SPX.
I have followed VIX daily since its price data became readily available in 2006-2007. VIX (VXO actually) is used as part of the 2CS Sentimeter, so I feel comfortable with VIX and have a healthy respect for its quirky, and jerky, movements. So I took the profits on all my UVXY at 38.50, but left in place the DXD (leveraged inverse DOW 30) and SPXU (leveraged inverse SPX).
The 2CS itself (five day VXO * five day CBOE P/C ratio) was 118 on Friday's close. 110-120 is the range where most 5-8% declines end, but most of the five day total was contributed by August 19-21, so 2CS is probably going higher in the next two days. So I suspect SPX is going down on Monday or Tuesday. I'll try to put up a chart showing 2CS values at important high and low SPX points later today.
The Scottish trade entry system is set up for a reversal signal for SPX, but it was set up for one on Friday and didn't give a reversal signal. So we just have to see what the open and first one-half to one hour show us. Anything can happen on an open. The simplest thing for a reversal would be opening up (NYSE session) and the open being the low of the day.
Gold had a good week but I'm not convinced the low is yet in. If gold can stay above 1155 it has a shot at 1180-90. I Expect the US dollar to reverse upwards and gold to make a retest of the low, or lower before the end of the year. For the record, I have not sold any of my long term gold or silver, and I may add if we make new lows.
EDV, the ETF containing only thirty year US Treasury stripped bonds and coupons has made a good run, and I took profits on 25% of my holding on Friday. As long as economies nearly everywhere look deflationary, I think EDV has a shot at its all-time high near 140 eventually. That would mean about 2 1/4% on the thirty year Treasury bond.