Chart of the Day - Tuesday, October 1st, 2019

Today's Chart of the Day was shared on Twitter by David Keller (@DKellerCMT). It's a daily bar chart of the S&P 500 index since April. David lays out the three directions of the market in order of least painful to most painful. He argues that sideways markets, like the one we're currently in, are the most painful. The absence of a clear trend can indeed be frustrating. At least in a downtrend you know to either take short positions or sit out in cash. A sideways market is challenging because investors don't want to be in cash in fear of missing out on the potential upside. However, at the same time, they don't want to be overexposed to potential drawdowns either. Paul Tudor Jones once said, "Markets trend only about 15 percent of the time; the rest of the time they move sideways." If this is true, then we'd all better get used to being frustrated a majority of the time!