![]() ![]() But if you want to know the best stocks to buy now, then please check out my new special report: The above commentary will help you appreciate where the market is going. That’s at least part of why the VIX is so low right now. Thus, implied volatility (forward looking) tends to come down as well. The summer months tend to be slower in terms of realized volatility (the actual movement of stocks). While we could see a short-term spike based on the news cycle or the Fed, I expect volatility to remain relatively low. The price is now firmly below 15, which is often considered a low-volatility regime. However, where we are now in terms of price is pretty much a non-factor.Īs mentioned earlier, volatility, as seen in the VIX chart below, has come crashing down in recent days. ![]() A price too high or too low is generally not good for stocks (for different reasons). Keep an eye on oil as it could be a leading indicator for the economy (and thus, stocks). However, it’s come back down to around $70 per barrel. Saudi Arabia announced production cuts, and the price of crude briefly spiked. Moving on to oil, West Texas crude has been a bit volatile lately. However, at this stage, they aren’t in as much of a hurry to hike. It has become apparent that the Fed isn’t done raising rates. That tracks with the mainstream narrative. In July, futures are showing a roughly 65% chance of a rate increase. Of course, they can accomplish some of their goals by jawboning (e.g. The futures market shows a 72.5% chance of the Fed doing nothing to rates next week.Įconomic data has been mixed to the point where the Fed can likely justify not increasing rates (directly). The market continues to predict a pause in rate hikes for June. We have the June meeting coming next week and then it won’t be a shock to see a whole lot of nothing in the markets until after Independence Day. Whether the market remains in this low volatility environment will mostly be determined by what the Fed says and does at the June and July FOMC meetings. However, mean reversion is a definitely possibility in the coming days (just due to the law of averages). That doesn’t necessarily mean stocks are going to sell off as the bands are quite narrow due to a lower volatility environment. You can see in the chart above, the SPX (S&P 500 index) has breached the two-standard deviation upper barrier. We’re seemingly experiencing the summer trading doldrums, where not much happens in the stock market from a macro perspective. Market volatility has really come crashing down since the debt ceiling scare ended with hardly a whimper. (Please enjoy this updated version of my weekly commentary originally published June 8 Let's take a look at what's going on in the S&P 500 (SPY) week. Things can change in a hurry of course, but I'm content with the mix of stocks we have in the portfolio at this time. We're at about 70% allocation of our cash, which I think is reasonable in this environment. For the time being, we're going to (likely) focus on smaller changes such as trimming or adding to positions. Several of the stocks have been in an uptrend as well. Of our 8 current positions, 6 are winners, one is breaking even, and one is a small loser. I'm pleased with how the portfolio has shaped up over the last couple weeks. ![]()
0 Comments
Leave a Reply. |