Dow Jones chart

The current volatility of global markets at the moment is somewhat unprecedented. The daily moves are ranging from 1% upwards. The Dow Jones, for example, is whipsawing 300 points in the blink of an eye and this is now becoming the norm.  What does this tell us?

The simple answer is that there is great uncertainty in the market at the moment.  You have the so-called trade war situation between the US and China, geopolitical tensions rising with Russia, and there are also worries about rising inflation (although the data isn’t really showing this yet).

My view is whilst there are a few factors on the surface affecting the market, the underlying issue is that, over the past few years, we have been in an incredible bull run, and for me, that is coming to an end. If you look at the Dow Jones, in particular, it is up over 65% in the past 5 years, and the majority of this move has come in the past 2 years.  There must come a point in time when investors take profit on their returns and take some money off the table. That’s what I think is ultimately happening here.

That being said, I suspect volatility will continue to remain high with big intraday ranges, which also leaves opportunities for money to be made by the nimble day trader.

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Vinay Sharma

Senior Trader

 

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The above-mentioned market views and content reflect only the opinion of the author, not that of ayondo. This service is for informational purposes only and does not constitute advice or investment advice.

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