by Liz Ann Sonders, Brad Sorensen, Jeffrey Kleintop, Charles Schwab & Co, Inc.

Calm, Confident…Complacent?

Nothing seems to be able to phase the stock market recently. Political infighting, Presidential tweets, North Korean missile launches, oil falling below $50, European political uncertainty, higher bond yields, and the Fed raising rates: none of those forces have knocked stocks off their recent uptrend. Volatility has remained remarkably low for an extended period, and the S&P 500 hasn't seen a 1% down day since October 11, 2016—the second longest span in history. Remarkably, at this stage of the eight-year bull market (reached on March 9), stock gains have accelerated in recent months while volatility has declined.

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Volatility remains low

Volatility remains low

Source: FactSet, Chicago Board Options Exchange. As of Mar. 14, 2017.

As stocks continue to move higher

As stocks continue to move higher

Source: FactSet, Standard & Poor's. As of Mar. 14, 2017.

Just when we were starting to get concerned about the potential of a true "melt-up" in U.S. stocks, the indexes trended sideways to slightly lower during the first two weeks in March, allowing the prior gains to be digested, and for sentiment conditions to ease a bit. According to the Ned Davis Research (NDR) Daily Trading Sentiment Composite, investor sentiment moved back into neutral territory recently, easing concerns about a near-term, sentiment-driven pullback. But is this the calm before the storm?

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