“We’re past the point of containment,” Dr. Scott Gottlieb, former commissioner of the Food and Drug Administration said, as quoted by MSN. “We have to implement broad mitigation strategies. The next two weeks are really going to change the complexion in this country. We’ll get through this, but it’s going to be a hard period.”
Of course, that fear is sending markets lower and volatility higher.
However, to safeguard markets, the Federal Reserve just cut interest rates to zero, and introduced a massive $700 billion bond buying program. Unfortunately, that’s not enough to get markets to turn around either this morning. Fear is far too great.
Worse, the Dow Jones just broke through prior support at Jan. 2019 lows, and could now test a low of 19,833, which was set back in early 2017. Should that also fail to hold, the Dow Jones could potentially test 18,252 – a low we haven’t seen since 2016.
This is creating sizable pandemonium.
However, there is still opportunity to be found by investing in volatility.
In fact, one of the best ways to trade volatility is with the Pro Shares VIX Short-Term Futures ETF (VIXY), which provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration as noted by Pro Shares.
We’d like to see the VIXY double, if not triple from a current price of $47.83.