Recent rally may be close to its end point as investors are ‘overbought and overconfident’
There have been several bear rallies this year and we could be coming toward the end of another one. Photograph: Spencer Platt/Getty ImagesBullish investors are too complacent, warned high-profile Allianz economist Mohamed El-Erian last week. “People are rushing to say, ‘don’t worry. If we end up in a recession it will be short and shallow.’ I say keep an open mind,” said El-Erian.
Certainly, a US recession looks likely. A recent Bloomberg economist survey found a 65 per cent chance of a recession in 2023. Investors’ current upbeat mood suggests any recession is not expected to be protracted. They may be right, but El-Erian is not alone in detecting hints of complacency. The Vix, Wall Street’s fear index, has fallen from 34 in October to 20. Datatrek Research notes that this year, the S&P 500 has topped out every time the Vix got to the 20-24 zone. This was the case in early January, early February, mid-April, early June, and mid-August. There is a reason why a calm Vix has been “such a clear signal of an overbought, overconfident market” in 2022, it says. Since 1990, the Vix’s average reading is 20.
Given ongoing uncertainty about US monetary policy and the possibility of recession, says Datatrek, we shouldn’t be at average levels of expected market volatility. “Therefore, when the Vix gets to 20 we know markets have become too complacent,” says Datatrek. The recent rally “may be close to its end point”.IN THIS SECTION
Ireland Latest News, Ireland Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Full list of people to receive Christmas bonus tomorrow after recent rule changeThe Christmas bonus will be paid starting tomorrow, 5 December, with all qualifying social welfare recipients to get an added 100% of their weekly long-term welfare benefit
Read more »
Two killed in missile attack in south Ukraine as air raid sirens ring across the countryNearly half of Ukraine's energy grid has been destroyed by recent Russian missile strikes.
Read more »
Ciara Mageean withdraws from Ireland team for European Cross-Country ChampionshipsMageean and her coaching team have made the decision to allow her recover from a recent illness
Read more »
McDonald says concessions around tricolour and anthem 'will be discussed' in united IrelandAlmost half of all voters said that changes to the anthem and flag would make them less likely to vote for a united Ireland
Read more »
Opinion: A zero-covid policy tightens China's perfect dictatorshipHuman rights lawyer and professor Teng Biao looks at the recent protests in China and asks if it’s the beginning of a new wave of resistance.
Read more »
Symptoms as boy dies in wave of Strep A cases as Irish mum issues warningAt least six other children - all of primary school age - are also known to have died from the killer infection in recent months.
Read more »