Trade War 2019: Three Ways Investors Hedged Fear


With markets in a state of panic, we reported that one of the best ways to prepare your portfolio for potential downside was by hedging volatility.

In fact, we highlighted three ways in early May 2019, including:

  • iPath S&P 500 VIX Short-Term Futures (VXX)
  • ProShares Ultra VIX Short-Term Futures (UVXY)
  • VelocityShares Daily 2x VIX Short-Term ETN (TVIX)

Each of those pushed aggressively higher, as fear ticked higher.  Each is still being used by investors as a way to hedge for the possibility of lower lows in major indices.

China has Defied Trump’s Tariff Demands

In early May 2019, Trump warned China, tweeting, “I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China. You had a great deal, almost completed, & you backed out!”

However, it would appear China didn’t take that threat seriously.


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In fact, China announced plans to add new levies to $60 billion of U.S. goods shortly after.

Some of those tariffs include:

  • CHINA SAYS TO RAISE TARIFFS ON SOME U.S. GOODS FROM JUNE 1
  • CHINA SAYS TO RAISE TARIFFS ON $60B OF U.S. GOODS
  • CHINA SAYS TO RAISE TARIFFS ON 2493 U.S. GOODS TO 25%
  • CHINA MAY STOP PURCHASING US AGRICULTURAL PRODUCTS:GLOBAL TIMES
  • CHINA MAY REDUCE BOEING ORDERS: GLOBAL TIMES
  • CHINA ADDITIONAL TARIFFS DO NOT INCLUDE U.S. CRUDE OIL
  • CHINA RAISES TARIFF ON U.S. LNG TO 25% EFFECTIVE JUNE 1

In addition, China could stop buying agricultural products and energy, reduce Boeing orders and restrict U.S. service trade with China. Others in China may even begin dumping U.S. Treasuries.  In short, this could get ugly.

It’s just another reason why investors are watching volatility-based stocks.

Technically, things didn’t look much better.

After failing at major triple top resistance, the Dow Jones Industrial Average pulled back, and broke well below its 50-day and 200-day moving averages.  If it were to break double bottom support dating back to March 2019, the index could break to 24,500 support and potentially 23,500 support as it did in early 2018.

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