Figuring Out Money: Everyone Forgot What Happened Last Time

Since bottoming several few weeks back, the stock market has rebounded to its most-traded zone. Some traders see new all-time highs ahead. Others see a potential pullback.

Following nine straight days of gains, market fear has disappeared. The volatility index, or VIX, has dropped back down below 20. Consequently, the view is that the low is now in. However, should investors let their guard down now that things seem all clear?

The answer is a clear no. Markets have gotten exhausted following the market’s bounce. And now stocks may be ready to trend a bit lower over the coming weeks.

The good news? It won’t be as bearish as the spring selloff. The rally in the market, while strong, still leaves indices setting a series of lower highs going back to the start of the year.

From here, it would be normal for markets to pull back 6-7% in the coming weeks. Should that happen, fear may come back into the market. But it would still leave stocks well over their recent lows. All good news for a long-term healthy environment.

Of course, investors need to be mindful of today’s news headlines. The market’s selloff was news-driven, as were the positive headlines behind most of the bounce. As more economic fundamentals filter in, markets may move to new all-time highs. Or they may renew the bear market.

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