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Big move in markets today. Earnings plus midterms are driving a big swing in the VIX signal, which is key for overall positioning.

VIX

Don’t ignore a move like this in the VIX, going from the low end of the RANGE to the top end and slicing right through TREND. RANGE is a probabilistic outcome for any day, which is why signal strength matters most when TREND sits outside the RANGE. This signal shifts us from net long to net short, and both positions should have been on going into today. We’ll cover what to do for each sector in today’s post.

MOVE

Bond volatility is also bouncing off TREND. A bullish VIX and MOVE paired with bearish HYG looks a lot more like Quad 4 today. We’ll see how all these signals look at the end of next week post-election, but that doesn’t mean you skip adjusting positioning through the event.

HYG

Credit is rejecting TRADE and firmly in bearish TREND, with TREND still well outside the top end of the RANGE.

SPY

SPY is officially breaking through TREND, which means exit completely in this ticker.

QQQ

Nasdaq was already in bearish TREND and is doing exactly what is expected in bearish TREND.

GOOGL

Google was an exit on Oct 16 before it fell off a cliff. These are the kinds of moves that can happen in bearish TRENDs, and they shouldn’t be a surprise to anyone who can see the full fractal math.

Sector Signals

DRAM

AI was the most obvious hedge to put on Wednesday and is down 10% since reaching the top end of the RANGE.

JETS

Jets was another we put on and is working out nicely today, with more room to the low end of the RANGE.

IGV

Software was a long we already reduced and is in danger of breaking TREND today. Remember: TRADE break = reduce, TREND break = exit. Watch today’s close closely for the next move.

XLF

Those were the shorts—how are some of the recent longs doing? XLF just hit the top end of the RANGE and is pulling back in bullish TREND. With VIX reversing signals, this is either a reduce to minimum or an opportunity to cut long exposure even further and take it off completely. That’s for you to decide.

XLY

XLY is pulling back to the entry spot. I’m exiting XLY on these new signals and holding XLF to minimum.

AMZN

Amazon was an exit on Oct 22. This is why I like ETFs for much larger positions than individual stocks—there’s far less risk in a collective signal than in single stocks. Markets are about limiting downside and compounding upside.

XLP

Not everything is crashing today. XLP, one of the new longs added, is ripping while the rest of the market starts to deteriorate.

IAK

Same with insurance stocks.

XLE

Energy is unaffected by today’s crash as Oil holds bullish TRADE TREND. What you were long matters a lot here, which is why it’s critical to model the full fractal structure on anything you own.

XLV

Healthcare continues its monster move. Despite being more long than short going into today, it’s still a good day even with VIX up 16%.

Macro Markets

GLD

Because the Similar Set Signal lets me go anywhere, my macro shorts are also helping in this volatility storm—down 3% on the day and short since breaking TREND on Sept 23rd.

DXY

Dollar is holding bullish TRADE TREND and approaching the low end of the RANGE for another bounce, which could perpetuate more Quad 4 style days.

TLT

Bonds are holding their new TREND but are not a position to enter near the top end of the RANGE.

Oil

As mentioned earlier, Oil is back to bullish TRADE TREND, with both TRADE and TREND now below the RANGE. That makes XLE a great long factor exposure while the market panics over AI and software crashes.

BTC

The signal got me to reduce Bitcoin right on time, and I’m still up big since entering in the mid $60s. Price didn’t quite reach TREND, so no orders were filed yet.

Despite a “market crash,” Similar Set Signal had me positioned to still do just fine on a day like today. Every time something like this happens, it makes me grateful for the fractal math—still in really strong positions across the board with zero panic in the portfolio. Most positions are simply continuing to work, now with extra volatility. We only have one more day until election day, and I’m curious to see how the machine looks going into next week’s close. Until then, stay safe and follow the fractal math. It will position you exactly where you need to be to manage risk and compound returns.

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