Markets like to price in the future, the more unknowns the more trouble a market will have trending in one direction. The greater the unresolved risk the more volatility that will occur as traders and investors work to price in the possibilities and probabilities of event risk.
Here are the headlines in the fourth quarter of 2018 that keep volatility high with traders and investors on edge.
- The yield curve has inverted.
- Oil has crashed.
- Half of the global markets are already in a bear market, down -20%.
- The Brexit is not as clear as was thought after the votes won leaving the European Union.
- Paris has been dealing with civil unrest about taxes and cost of living in France.
- Has Federal Reserve has been raising rates.
- India’s central bank governor Urjit Patel resigns.
- Italy showing signs of systemic risk.
- Deutsche Bank is having some serious issues.
- Chinese executive arrested
- Trump Chinese Tariff battle.
- Apple banned from selling some iPhones in China
- The Mueller Probe that never ends but seems to escalate.
- Stock indexes under their 200 day moving average of prices.
- Leading S&P 500 sectors are defensive. Utilities, Consumer Staples, and Real Estate.
- Some bearish stock index death crosses with the 50 day crossing under the 200 day moving average of prices.
- Most Crypto currencies crashed over -90%.
- Russian involvement in Ukraine.
- Elon Musk’s behavior and tweets.
- Random and unexpected tweets by President Trump.
“Short term volatility is greatest at turning points and diminishes as a trend becomes established.” – George Soros
As these factors become resolved we should see volatility decline and a trend in one direction become established.