The Clock is Ticking

Some investment commentators have been predicting that the bull market is about to plunge and turn bearish ever since this long-running bull market launched back in March 2009. At some juncture, the naysayers will be right. Perhaps what’s most significant is the way stock prices have remained so steady throughout 2017. Despite a few short bursts of anxiety-fueled market declines – events like the surprise Brexit vote – the market has stayed in the tightest range we’ve seen since 1965. Traders note that the average daily trading range for 2017 has been 0.55 percent – the lowest on record.

This environment of extreme calm is not only very unusual, it also suggests that the return to a more normal pattern of daily swings is statistically well overdue and could happen in the near future. Recent political and economic news have triggered analysis and predictions on what we might expect in the coming weeks. The following are a few key talking points around the industry.

• Executives at major corporations are distancing themselves and their corporations from the president. The post-Charlottesville furor that arose after President Trump failed to explicitly condemn white supremacist organizations for their violent acts, ended up with many chief executives stepping down from the president’s business advisory councils. Other corporate leaders at major manufacturing companies and financial institutions have spoken publicly about their support for inclusivity, diversity and tolerance. It remains to be seen if this resurgence of the role of businesses in the national political and social debate will have any impact on Wall Street or will end the so-called “Trump bump” effect on the stock market.
• Some market strategists don’t think major change is coming regardless of what happens in Washington. They tend to downplay Trump’s ability to ruffle Wall Street. Others trying to measure investor sentiment think there is a shift, and that investors are becoming increasingly nervous.
• Geo-political turmoil and tragedy overseas in Barcelona and Finland, as well as political protest at home, have reminded us of sad realities. Various financial news outlets have undertaken their own research to measure sentiments and track investor fear. Some report escalating levels of investor concern, and others reference the VIX index – Wall Street’s so-called gauge of fear – which has remained very low despite a few recent hiccups.
• The stock market remains linked to the U.S. economy even if factors like the Federal Reserve’s very low interest rates have been significant in the bull run’s longevity. The expansion of the economy continues – steady if unspectacular – helping to make this the second-longest rally investors have ever seen. Will it continue? At this juncture, statistically we are overdue for a correction, and every day added to the bull run makes it more likely that its days are numbered.

The commentary above is intended to be general observations only. Bear in mind, that not even the smartest, most experienced brokers on Wall Street can tell you when the tide will turn. If you think it might be time to retune your portfolio strategy, make sure to get expert advice from your tax and investment advisors before you act.