Watch out for that Volatility Index.
The I:VIX -- Wall Street's 'fear index' -- is down 40.5% year-to-date. No, that doesn't mean stocks are down. They're up. And it's been a smooth ride upwards in for 2019 so far.
But with trade uncertainty -- and even with the positive news out Sunday there's still uncertainty -- plus persistent questions about when the U.S. will hit a recession, there might be some volatility ahead. Also, the European Central Bank may tighten financial conditions soon, which could hurt equities.
"We will have some volatility for the next couple of years," Jim Carney, Founder and CEO of Parplus Partners said. He added, "There are a lot of divergent views," which is one of the underpinnings of volatility, as the tug of war between bulls and bears whips the market violently in both directions.
As for when that volatility may hit, Carney's rough estimate is for October. "If I had to guess, October. October is always the bad month," he said.
He also mentioned the U.S. market is currently "overbought," which many on Wall Street have been saying of late. The average forward price-to-earnings ratio on the S&P 500 is above 16, and the long-term historical average is 15.4. With a rough macro economic backdrop, there might be little juice left in the market.
Still, Carney says, "I would not be selling," at this point. "Overall, the economy is strong...Compared to interest rates, I don't think that the stock market is a bad place to be."
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