Volatility Up, Small Caps Lead & 3 Year Anniversary
Volatility has certainly increased. From less than 15 to over 22. That’s almost 50% in short order. Stocks are int he midst of the mild pullback I have written about. 2-5% is the range on the downside. Weakness remains buyable.
You know where money is going on an index level? The same place I have written about for six months, small caps. Below is a chart showing the small caps relative to the large caps. When the link goes up, smalls are beating the large. I think that trend continues into 2026 albeit not as strong as it has been.
The bull market turned three the other day. I vividly remember trying to get on as many media outlets as possible in October 2022 when I was so firm that a new bull market was beginning before our eyes as inflation soared and stocks cratered. Overprices stuffed Wall Street shirts were out in masse that 2023 was going to see recession and more bear market. As usual, they were wrong and hurt millions of portfolios with their bad advice.
In the short-term, we have negative seasonal trends for another two weeks, but the down 2.5% Friday counters that with strong returns over the ensuing 5-10 days. I won’t be surprised if the major stock market indices digest the big down day before resolving higher next week.
On Monday we bought TLT. On Tuesday we bought PCY, EMB and SPYQ.
