On the surface, one could realistically expect a bear market or even a significant drop. Banks failing, Feds scrambling to tightrope inflation, job cuts in the previously immune tech space, interest rates at highs. Even headlines warning of the coming crash. Yet the S&P showed a bottom last October and has been hobbling its way up since then.

Lets look at it from another angle. Companies raised prices during covid and have not brought them back down. Supply chains have recovered but prices really have not. Oil companies jacked up prices on Russian war news, set all time record profits and, other than some slight reductions, gas is still inflated. So what if the market, with one key valuation factor based on profits, likes this current environment? Some articles make it seem like the bulls are weakening and are climbing a fragile ladder to lift the market but what if its the bears that are having a hard time poking holes in the market?

When momentum gets exhausted, this pattern pays out. To recognize the signs, click here.

Here is something to chew on as you sort through this conundrum . Look at the VIX, which is a measure of volatility. Historically, when the VIX goes up, the markets go down. When the VIX goes down, the markets go up. That pattern often looks like much sharper drops than climbs but it is generally consistent.

As you can see the chart, the VIX is as low as it has been since the bull market of 2021. I’d like to say I am not a creature of habit, but I know I am pretty predictable. I think the market might be able to say the same thing,

I really shouldn’t have drank all of that cough syrup this morning.

Keep learning and trade wisely,

John Boyer

Editor

Market Wealth Daily

P.S.-Reply and let me know if you get the movie reference.