1.Stockmarket Seasonality Map
For completeness, here’s the stockmarket seasonality map I mentioned.
As you can see, it’s around this time of year that price tends to be more ranging and volatile with a tendency for downside in stocks and chance of volatility spikes.
But also — let’s not forget about the good old YER [Year-End Rally]. As far as upside opportunities go, maybe the best thing that could happen would be a nice healthy seasonal correction to setup for a YER to close out what has already been an eventful year… $S&P 500(.SPX)$ $Cboe Volatility Index(VIX)$
2.Pressure Points
Now to lean a little further into the bearish side and examine the “what could go wrong?“ aspect (and p.s. I also like to ask and challenge people to think of the opposite question: “what could go right?“ …you always see people dooming it up for engagement on social media with the first question, but rarely the second).
The key thing that could go wrong, and not just tactically/short-term, would be that we get a typical seasonal spike in volatility and significant sell-off in risk assets… arising at a time when US assets are collectively still trading near record highs (and higher than both the dot com bubble peak + subprime credit boom peaks).
There are very clear pressure points that could get triggered off if the right (wrong) combination of things were to happen.
I’m not trying to call a bubble top or peak or anything, but I think we need to be conscious of these critical background features and realities of today’s markets — both on a larger long-term cycles standpoint, and in the more immediate tactical seasonal swings aspect.
It’s about pragmatism.
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