There’s an old saying that goes, “the market climbs UP using the stairs. But comes down in the elevator.”
Meaning, the market tends to grind higher over time. Slow enough where many are bored, lulled to sleep. But then the market swiftly moves lower (that quick elevator ride to a lower level), waking everyone up with a jolt.
Some of these swift rides down are quick buying opportunities.
Some of these swift rides down are a change in season (growth into recession).
And some of these rides down are simply a “time out.” Nothing more, nothing less.
And that is where we stand now.
But we haven’t had one of these “time out” periods in a while. A long while. Right now, a TON of things over-hang the market, no clear consensus.
For example: for as many folks who are worried about deflation, there are just as many who will point out the rate of inflation doubled last year and want to buy gold.
For as many folks who are worried about whether the Fed should raise rates, there are just as many who believe the Fed should move to negative interest rates immediately.
For as many folks who are worried about a Trump administration, there are just as many who are worried about a Sanders administration, or another Clinton in the White House, or Cruz, or Rubio, or…
The problem is ALL of these questions will eventually get resolved. But they won’t get resolved right away, which infuriates folks who watch the market (and their money).
That is … if you LET it infuriate you.
This is why we rely on our “weather barometers” — these charts and indicators.
Without these tools, this would truly be one of those “rip-your-hair-out” kind of markets.
We can’t predict the future. Anyone who pretends to tell you what’s coming is not being truthful. But what we CAN do is accurately measure (and be aware of) the level of RISK in the market. And that risk level now is elevated. The risk levels are NOT at “2008-panic” levels (ooof, they’re nowhere close!), but’s we’re NOT at DEFCON 5 (lowest state of readiness) either.
It’s a time out. That’s all.