From a psychological perspective, the emotional indicators we label fear and greed rule the liquid financial markets with an iron fist. The month of May has shown investors and traders alike how taking profits is a necessary action because winnings can quickly disappear if you snooze on your investments. Today’s volcanic Fear Index, the VIX (CBOE Volatility Index), bursted higher and gushed with caution.
If you take a look at today’s VIX chart, you will see the VIX price above the major 50-day and 200-day moving averages. It is very possible that funds are still liquidating equity positions to close out their books for May. With two trading days left in the month and Dow 10,000 broken once again, the likelihood of the downdraft continuing is high.
In order to sleep calmly at night knowing the printing presses are churning the cash machines in Europe, you may want to consider a more firm mattress packed with Gold (NYSE:GLD). The VIX and GLD chart illustrated a direct correlation upward today. If you want to see your money moving up, as opposed to dormant with cash, GLD is an attractive way to play the theme. GLD gapped up this morning and held above the 50-day and 200-day moving averages all day to close at $118.48.
With the World Cup approaching in June, European governments will be racing for stability as fans from each participating country are more energized than ever for the biggest global sports event of the year. As uncertainty and volatility are still in effect, the World Cup Champions will be demanding their Gold awards remain Golden!
Disclosure: No positions in the companies mentioned, but the Author owns a gold necklace his grandparents bought him 15 years ago.