Market ‘Black Swan’ Fear at Record High
BY ANTHONY MIRHAYDARI, The Fiscal Times
iStockphoto/The Fiscal Times
After last Thursday’s volatility surge, driven by the horrific missile strike against Malaysia Airlines flight MH17 and fresh violence between Israel and the Palestinians, the stock market has calmed down. Large cap issues in particularly seem largely unfazed by all this, with the Dow Jones Industrial Average not suffering a meaningful close below its 20-day moving average since April.
Moreover, the Dow finished last Friday with its 11th straight weekly gain — the second longest winning streak of the bull market to date. Bidding stocks up into the weekend is a classic sign of confidence, since it assumes that nothing will go wrong in during the two days the market is closed.
One way to interpret this is that while most investors are very, very complacent now, many are growing more fearful about the future. In other words, fears of a “Black Swan” event are increasing.