When Bearish Narratives Pervade, We Put Them To The Test

In this week's State of the Markets video with Wayne Nelson and Seth Golden (of Finom Group). we discuss the vast variety of variables affecting the equity markets as they climb toward new highs. You can click the link to review the video, which runs about 59 minutes. There is an outline below, with chronological subject matter timeline. 

• Discussion on market volatility which has remained dormant and subdued through Q1 2019. Realized volatility has also been stamped out of the market.
• V-shaped market recovery has also made technical analysis somewhat difficult.
• Slope of VIX Futures term structure is rather flat when compared to 2017. Although the slope shows a contango relationship between m1 and m2, because the slope is so flat, contango can be curtailed rather quickly.
• There are similarities between 2017 and 2019 Volatility presently. (0-15 minutes in)

• Buy and hold does work. It doesn't guarantee outperformance, but it does eliminate the dangers of market timing practices.
• Twitter (Fintwit) can be dangerous for novice traders/investors as it is littered with overly bearish market/economic sentiment and sensationalism
• Discussing Jesse Felder's article on Volatility
• Discussing Michael Gayed's article, forecasting market collapse in 3 weeks based on Lumber prices and SPX-TNX relationship.
• Driving fearful narratives which purposefully limit the readers scope of information. (15-39 minutes in)

• There are ways to validate all data points.
• Morgan Stanley's Michael Wilson lies in CNBC interview by stating, "We've been overweight equities".
• An earnings recession may not come to pass. Estimates came down too much as fear begets fear.
• Investors have struggled with the V-shaped rally as they focused on the last 6 months and remain uncertain of the market going forward and after a massive rally. Sentiment remains neutral. (39-48 minutes in)

• 3 black crow formation discussion suggests the market will fall in the current week, as market weakened in the previous week.
• With a Breadth Thrust and Zweig Thrust earlier this year, it can void many technical points of analysis as well as statistical, historic trends in the market.
• What to do when the market does express a pullback.