Friday's Updates & Links – 01.16.15 • Decoding Markets

I don’t know about you but so far my year has got off to a slow start. I seem to have been stuck in holiday mode for the last week or so and I’m only just about getting back into the swing of things.

Probably just as well really, because we’ve seen some particularly nasty moves in the markets the last few days. Yesterday’s unbelievable events in Switzerland saw the Swiss franc jump over 30%, which is unprecedented.

Whenever a big move like this happens you rack your brain trying to think of a way to play it, but at the end of the day no-one could have predicted it and it’s better off not worrying about it. And I don’t care what Bloomberg says, this guy did not call it by saying CHFEUR would hit 1.18 this year.

To be honest, even if you had been on the ball yesterday, you probably would have had difficulty making any money since the market dropped so fast; there were no bids to be had and many brokers shut down trading.

One thing this kind of move does do though, is create uncertainty and markets are already seeing a decent amount of volatility.

As always, it’s a good idea to keep an eye on the $VIX which has moved up to 22.39 today and is not far away from the two-year high it hit in October.

VIX-CHART

Updates

I may have been in holiday mode but I did manage to put together a new white paper which was also added to the HTWBS course.

The new strategy is called the Unusual Volume system. It’s a promising trading strategy for stocks based on unusual changes in volume. The system has a 1-week holding period and an indicative performance of 32.54% CAR with a Sharpe ratio of 0.62.

Two potential trades from the system this week are $XON and $ZIOP. I will be watching these closely today.