The Most Dangerous Market Isn't a Crashing Market

The most dangerous market isn’t always the one that’s crashing.

Sometimes it’s the market that keeps giving you perfectly sensible reasons to wait. We’re getting plenty of those reasons right now.

Fresh fighting between the U.S. and Iran has pushed oil back above $90 a barrel. The 30-year Treasury yield climbed to 5.3% last week, its highest level since 2007.

Over the past two weeks, the S&P 500 is down 2.6%, the Nasdaq is down 4.5%, and Google and Amazon were among the technology names pulling the market lower, both having dropped as much as 4%.

If you’re sitting in cash waiting for things to calm down, I get why.

Oil is moving the wrong way. Bond yields are moving the wrong way. Another ugly headline can hit at any moment. Waiting feels sensible. And that's exactly how people can get locked out of the next move.

I’ve watched this happen before.

Fear builds for days or weeks. Investors wait for the all clear. Then one headline changes the mood, money rushes back in, and the stocks everyone wanted to buy are suddenly 10% or 15% higher before people feel comfortable again.

I call that a lockout rally. Not because you literally can’t buy after it starts. You can. The problem is that the comfortable entry you were waiting for can disappear before you become comfortable enough to take it.

I’m not trying to predict the exact day oil peaks or the exact headline that cools things down. I’m watching what's happening inside the businesses while everyone else watches the headlines.

And on that front, the picture looks very different.

What the Market is Missing