As I type the Dow and the S&P 500 are barely clinging to gains this morning, while the Nasdaq Comp is down .27%.
As we've stated multiple times herein over the past few months, current macro conditions do not allow us (so to speak) to move to a markedly defensive posture within client portfolios -- despite the presently heightened level of downside volatility. In other words, general conditions suggest that stock price action presently deviates from fundamental reality.
We've also expressed emphatically our view that the overwhelming issue is not the Fed, not Brexit and, as of this morning, not the contradictory commentary coming from the European Central Bank: Nope, it's the presently uncertain state of global trade.
Our position has therefore been that if/when the trade issues are resolved, general conditions are still in expansionary mode, we should see equity markets resume their march into all time high territory. The operative (critical) words being "if general conditions are still in expansionary mode".
If, however, the back-and-forth takes us to the point where macro conditions -- as we see them -- suggest recession is looming, it will be too late for a trade war truce to (other than a reaction rally) rescue stocks from the clutches of the next bear market.
Frankly, I think the market (players in the aggregate) agrees, and that would be our best explanation for the notably high volatility we've seen of late. In essence, while short-term traders are content with actively trading, and, thus, inspiring, these monster intraday price swings, the big money looking to ride the next big wave is unwilling to commit to a position until either the trade issue gets resolved or conditions completely rollover.
Thus, for all intents and purposes, for investors (as opposed to traders), the market is presently in limbo. Again, issue resolved while expansionary conditions exist would be very bullish; conditions turning bearish, trade war truce or not, would be, well... bearish.