FX Evolution: The Last Time This Happened Was 1998…
The stock market is finally back to a most-traded zone after a few weeks of extreme uncertainty. Markets spent the week largely midway between their prior (and all-time highs), and the recent low.
This zone could allow for market structure to form, allowing for a move higher over time. That will make it easier to trade, although it will also mean declining volatility as trade war headlines recede or turn positive for markets.
The latest trigger signal of several thrust indicators also suggests that markets may have hit their lows for now. They could retest those lows later in the year, especially if the tariff news results in a measurable slowdown in economic activity.
Overall, these factors are similar to the market action in 1998. That’s when the tech bubble was starting to form. But several news events caused a major pullback in markets, only for them to go on and make prior highs.
If the historical similarity holds, markets could be in for a sideways few months. After that, they should start to break free later in the year.
For now, investors can use big down days in the market to add to industry-leading companies. And continue to focus on non-tech companies. Tech’s dominance in the market has declined since the start of last year, suggesting other sectors such as healthcare may continue to lead.