The government shutdown ended almost as fast as it came, and while I do try to be an optimist in all things, something tells me this isn’t the last of the gridlock that’s been building in Washington. But as I always say, we will just trade the math…
So yesterday was quite a milestone in the markets. Whenever something that’s never happened before happens, I do like to draw attention to it. I want to be clear though that it’s not because I’m making a market prediction or using it as a backdrop for a broader narrative. I certainly don’t ever allow my own emotions to dictate our trade positions. I’m showing it because it is a part of the analysis. We have to know everything about where we are right now in order to have the best chance of putting forward the best risk / reward trades.
There it is in all it’s glory. 395 trading days without even a 5% correction in the markets. While it’s certainly impressive that in the mid 90’s there was another similar streak, I think it’s far more impressive (and abnormal) to break the record in this day in age.
9 years into the 2nd longest bull market in history, market valuations at the 2nd highest level in history, and interest rates rising through the whole thing. It’s not exactly what I would call normal. I think the general uptrend makes sense, but you’d think there would be a few small interruptions along the way.
Volatility has never been this low for this long.
Normal: “the usual, average, or typical state or condition”
By very definition these markets are not normal. Now let’s be clear, that doesn’t mean we are bearish. If the signals call for it, we will absolutely go long stocks and short volatility products. For some of you you’ll be happy to do it. For others it’s going to be extremely uncomfortable to invest any money in this market. But I gave up on trading my gut instincts years ago and I’m certainly not going to start now.
I guess investors in the last 10 years are lucky? We’ve invested through both the largest crash since the great depression, and the longest period of calm in history. Lucky us…
We will be patient, stay disciplined, remain agnostic on market direction, and just trade the math and the signals as they come
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