Carlsquare weekly market letter: Time for a break

Read the weekly market letter here:

Carlsquare weekly market letter

• As we correctly predicted, September’s sell-off has turned into a stock market rally. It is being driven by an improved inflation outlook and central bank policy changes. However, with a short trading week due to Thanksgiving in the US, trading is likely to be thin and dominated by traders
• The set-up is for a continued strong market, but looking at various indicators, the VIX is giving a warning sign in the absolute short term. This could lead to a pullback in the market, but also leave room for Santa Claus to deliver a traditional Christmas rally

The chart below shows the 2-hour VIX index forming a falling wedge. The VIX reflects the market’s perception of volatility over the next 30 days.

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