Business & Investment

Stock Markets: The only reliable trend in the current stock market is more violent volatility.

One day, the next day, Stock market It makes life miserable for anyone looking for a coherent story to explain the move. However, there is one problem. That is, the episodes of daily cataclysms are getting worse.

Especially at the speculative end, the trend is remarkable.In Nasdaq 100, the absolute size of short-distance travel was about 1.5% per day up and down this month. That’s three times as much as December since the defeat of Christmas 2018, and almost twice as much as last year’s average move.

While many forces are active (witness all evidence of the rapidly spreading Omicron variant on Friday), they are unaware of increased volatility when there is an endless central bank promise. Is difficult Liquidity I’m on the verge of crisis. The Federal Reserve While the Bank of England raises interest rates, it marks the end of a easing cycle that has strengthened hawks and supported a 20-month, $ 60 trillion rise in global equities.

Lenny Zucker, Chief Investment Officer of Capital Y Management, said: The rise in volatility “reminds us that next year’s Fed’s actions could be more influential after nearly two years of fearless trading on the riskiest assets.”


A major reversal took place in a week as investors sought to see if Fed Chair Jerome Powell could design a soft landing by curbing inflation without hindering growth. Investors initially comforted Powell’s strong economic support and characterized demand and income as strong, but then long-term Treasury yields declined, raising concerns about their continued strength. I was revived and my anxiety sank.

The Nasdaq-100 index surged 2.4% on Wednesday when the Fed announced the early termination of its economic stimulus package, suggesting two rate hikes next year, but only wiped out overall profits in the next session. After all, tech-intensive gauges have fallen by more than 3% in five days, one of the worst weeks of the year.

The smooth ride that characterizes this bull market is at stake. Nasdaq 100 has posted 5 daily moves of at least 2% in the last 3 weeks-3 up and 2 down. This was consistent with the total number of relatively wild sessions over the last five months.


Large flip-flops reflect the growing turmoil among market participants, according to Mike Zigmont, Head of Research and Transactions at Harvest Volatility Management.

There are many contradictory stories. Credit Suisse Group AG strategists point out history, saying it’s safe to buy stock early in the tightening cycle, but Bank of America Corporation strategists say this time because inflation is out of control. It warns that it may be different.

“I’m not sure, and I think many investors are like that,” Zigmont said. “They look at the world and have a view, but that’s not a strong view. I’m not sure, but with a lot of trend followers, you can get this whippy we’ve seen. . ”

In the speculative corners of the market, the ride quality is more bumpy. In the past few weeks, Russell 2000’s small caps have fallen to a 10% correction, newly created stocks have fallen by a 20% bear market, and a group of non-profitable tech companies have plummeted by almost 30%. ..

The Russell 3000 Index is up 20% this year, but the median share price is down 21% from its recent peak. According to JPMorgan Chase, these major differences are smaller and more volatile equities, especially economically sensitive equities, driven primarily by hedge funds that reduce risk exposure while strengthening bearish bets. Reflects a “historically unprecedented overshoot” in the sale of Marco Kolanovich & Co. Strategist.

All bears are likely to set the stage for a rebound to the New Year, when the pandemic is over and the economy continues to expand, Koranovich said. “This market episode can end in a short squeeze and a cyclical recovery at the end of the year and January,” he wrote in a note on Friday.


Not everyone is confident that the reflation trade will return soon. Due to the uncertain economic course, investors sought safety from companies with stable income and dividends. In a week, MSCI indicators for defense stocks such as utilities and consumer staples rose 1.2% compared to a 2.9% loss on circulating stocks. The performance gap was the largest since April 2020.

For Ella Hoxha, Senior Investment Manager at Pictet Asset Management, this disagreement reflects a harsh reality. The unorthodox recovery after the pandemic remains uncertain.

“If we believe we’re in the second half of the cycle, we’re probably making more mistakes towards the Fed, making policy mistakes and tightening too much,” she said. He said in an interview with Lisa Abramovich. “If you’re in an early believer camp, that’s a very typical type of behavior we should see when we start tightening policy. That’s where you’re sitting in a controversial conundrum.”

Stock Markets: The only reliable trend in the current stock market is more violent volatility. Stock Markets: The only reliable trend in the current stock market is more violent volatility.

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