We’ve all seen the headlines that dominate the financial news media about the increase in market volatility over the past two months. How does this “information” affect you and your investments?
We told you last September about an alert that many of you aren’t receiving. This is the weekly email that alerts you to changes in the VQs after their weekly recalculations. The email looks like this:
The list is long, but you can see a pattern here. Most of the stocks that I’m following, and most of the stocks that you probably own as well, have increasing VQs. That makes sense in this market environment.
Teva Pharmaceuticals (TEVA) is a stock that has seen its VQ move higher over the past several months. Here’s an example of both stops using TEVA.
We’ll look at the SSI Stop first. TEVA triggered an SSI Entry signal on February 12th. The SSI Yellow Zone and Red Zone calculations are based off the most recent high of the stock which occurred a month earlier at $22.07.
The green line at the bottom is the historical VQ. In this chart, it has moved higher from 25.38% to 28.55%.
The historical VQ jumped in the second week of February from 25.75% to 27.91%. This caused the VQ stop to move lower from $16.31 to $15.91. The VQ stop dropped again when the VQ moved above 28%. The VQ is currently 28.55%, and the VQ Stop is $15.77.
The VQ stop moves lower as the VQ moves higher to compensate for the increase in volatility. If you’re using VQ stops and don’t want your trailing stops lowered, it would make sense to add either a fixed price alert or use a percentage trailing stop based on the VQ at the time you buy the stock.
For the past few years, we’ve mostly been dealing with decreasing volatility and decreasing VQs. The landscape is changing, and it’s important that you’re aware of how this increased volatility affects you and your investments.
We’re going to discuss this in more depth on Wednesday, April 18th, from 1:00-2:00 p.m. Eastern. Click here to register.
To your investing success,
Education and Research Specialist, TradeStops