Volatility Returns

There are several reasons that volatility has returned to the stock market.  Gridlock between Congress and the President is one reason. Europe is still in bad shape, too.  Another reason involves major stock indexes reaching high points of the past, and there is not much gas left to push stocks higher.  Finally, we have a number of technical indicators showing volatility in the near future.

The New York Stock Exchange Summation Index, $NYSI, is in a downtrend.  The inverse volatility index ETF, XIV, is showing extreme levels of volume, and this is further proof that a downtrend is coming.  Then, TLT, the long-term government bond ETF, has started on uptrend, and TLT goes opposite from stocks.

These charts are from Google Finance.  Double-click on the charts to expand them for better viewing.  I believe the best course of action is to reduce your current long stock positions and buy TLT because I think it can go to $130 per share or more over the next few months.