It’s hard to not listen to the experts and pundits who offer an array of opinions and points of view. Everyone has to be smarter than us, right? A market opinion is like a mouth – everyone has one and most don’t know when to shut it (there is a similar analogy most of us know, but I want to keep it clean!). Those opinions tend to move us in dangerous directions, so it’s always important to keep in mind that the market will never share an opinion. Like Jack Webb said in Dragnet: “Just the facts!”
Lately market opinions are popping up everywhere, and it seems that wild guesses are being tossed around daily, all of which turn out to be frightening – and false – scenarios. Yet, if we look at the charts and technicals, the truth is easily revealed without any bias.
One fact we have noticed is the lightning speed of market moves, not to mention the rising market volatility. We saw this starting to happen in December as trends started to break down – even some pundits said we would likely see more volatility in 2015. Correct so far, but it’s only been a month. Forecasts and market opinions after January 2014 were quite bearish for the year, and if you listened to those you probably ended up losing.
We continue to be pummeled by news, events and shocking, black swan-type moves, and the markets reflect the worry that the other shoe will drop. Let’s peel off the macro events from January:
The Swiss Bank decoupled from the Euro, the ECB announced a massive QE plan to shore up their economy, 13 other central banks cut rates significantly, terrorism continued its reign in many countries, crude oil dropped to its lowest levels in five years (and doesn’t seem to have a bottom), the strong dollar caused much consternation, interest rates fell to historic lows (chasing down emerging market and euro debt yields), and let’s not forget the big, bad weather that hit New England.
All of this happened in January! No wonder the VIX went haywire and there were triple digit moves every single day this month (20 trading days).
So, where do we go from here?
No doubt the market looks vulnerable for a decline, and the conditions mentioned above are not going to inspire much confidence if you want to get long on the market. Everyone now wonders if the Fed put is all but gone, but I’m not sure. If these stock market gains belong to the Fed, and if they are gone before it is safe to leave the playing field, well, that leaves everyone with too much doubt and very little confidence.
However, we are still in a trading range, albeit at the bottom of the range, and until something cracks, then we will stay the course. So many market opinions have pushed us to make the wrong move and end up on the wrong side of the fence. Read them, acknowledge them, but don’t trade on them. The market will always tell you where it’s been, where it’s at, and where it’s going.