00:00 Seana Smith
The S&P 500 has declined for a third consecutive day as tariffs lead to market volatility here at Yahoo! Finance. Jared Blikre is now with us to share insights from today’s trading session. Despite the drop, the S&P 500 managed to steer clear of a significant threshold.
00:12 Jared Blikre
Absolutely, the bull market remains intact. I’m not a fan of the strict 20% bear market definition. Historically, some markets have narrowly avoided being classified as bear markets but still felt bearish. However, this doesn’t seem to fit that mold. Now, we’re observing a shift in trading patterns. Looking at the S&P 500 over the last five years, I’d like to point out the 2021 peak reached at the close of 2021 and the start of 2022, around 4,800. That’s my critical reference point. We’ve still got some distance to cover. Notably, we dipped below 4915 during the day, only to recover sharply due to some misleading news, resulting in an 8% bounce. Many other markets have already entered bear territory, including the Nasdaq Composite, Nasdaq 100, Russell 2000, and Dow Transports. Not to mention, sectors such as energy, materials, technology, consumer discretionary, and real estate—plus a significant rise in bond yields today marked the worst performance for bonds in many months. This all adds up to a market experiencing heightened volatility. That brings me to my next point: the VIX has surged. We’ve been analyzing this in depth today, so let me quickly show you the VIX. This chart reflects only closing prices over the last five years, including the pandemic period. We haven’t crossed the previous highs, but it’s noteworthy that the VIX took time to reach current levels. There was a brief spike in March, but it lasted mere weeks. Usually, when the VIX fluctuates, it goes up quickly and then down just as fast—this time is different. Recently, I spoke with Bob Lang from Stocks and Translation, who discussed the importance of buying protective options. Here’s what he had to say.
03:10 Bob Lang
I’m a strong proponent of portfolio protection. Think of it like insurance; we all have health insurance, life insurance, car insurance, fire insurance—the list goes on! We don’t purchase these insurances expecting a return; it’s about safeguarding ourselves against potential disasters.
04:16 Jared Blikre
In summary, if you haven’t bought insurance yet, it’s too late. Investing in the VIX at present levels is unwise; in fact, you should consider selling, though I don’t recommend that either. The key takeaway is that proactive measures are essential when it comes to purchasing insurance.
04:31 Seana Smith
Indeed, the VIX serves as a form of insurance, but timing is crucial—you need to buy it before it spikes.
04:40 Jared Blikre
Right, before it soars. Now, let’s pivot to another asset class we haven’t discussed much, which is cryptocurrency. We typically see wild fluctuations in this market, but
04:58 Jared Blikre
lately, it has shown remarkable stability. Crypto has served as a sanctuary of value and sanity over the past few days. Take Bitcoin, for example—it’s down 1% today. Discussing its fluctuations might seem misleading; let’s look at its year-to-date performance. It recently bounced off its 200-day moving average. Although it dipped to about 74,000, a significant support level, it rebounded quickly. That price range of 70,000 to 72,000 was an area of interest for me a few months back, and it got pretty close. There are technical factors suggesting 70-72,000 is crucial. Perhaps Bitcoin isn’t just an inflation hedge; maybe it’s also a hedge against uncertainty.
06:22 Seana Smith
That’s a possibility. It’s often touted for its lack of consistent correlation with other assets.
06:30 Jared Blikre
Absolutely. Its correlation shifts seemingly every few weeks or months.
