After a year of record closing highs and little to no volatility, it was expected that the stock market would need to blow off some steam. Last Monday, the CBOE Volatility Index, or VIX, surged nearly 116%, its biggest one-day increase since at least 2000.
Last week was one of those weeks where I was completely dialed in and laid out the roadmap very close to the way it worked out. If only I could do that every week. Of course, it helped to have the aid of the time windows. As you know markets peaked in the 610-day window to the August 2015 bottom, which is the Dow bottom.
It's been quite a tumultuous week in the markets, as we all know, but something seems amiss.....on Thursday when the Bank of England's Mark Carney talked about raising rates faster than expected, the pound popped (as one would expect) but it did not take even a few hours for it to completely reverse trend as if nothing happened, and the USD was back to being strong again. The speed of reversal was quite strange!
The outstanding performance for equities which sent many major indices to record highs may have just paused. Asian stocks were trading broadly lower on Thursday after the markets notched its first daily decline in 2018./ It was neither economic data nor earnings that prompted the declines, but rather the selloff in U.S. Treasuries which sent 10-year yields to a 10-month high.