The economic data is a fairly even stream of good, if not great data.  It gives no indication of a recession in the near future.  Unfortunately, there are other factors than the economy, such as geopolitical issues, as well as stock market data.  Some analysts even seek guidance in history.

Geopolitical weight on the stock market is increasing.  It was April 5th that I predicted the President would be impeached in 2019.  (Some readers thought that was a partisan belief.  But, given enough accountants, I could find reasons to impeach anybody, especially somebody with complex business relationships.)  It is fortunate that corporate profits have been rising as geopolitical weight on the market has been increasing.  Also, a coordinated global recovery may be carrying some of that weight.  The stock market is holding up well.  But, the weight of impeachment will continue to increase.

However, one piece of market data worries me.  That is the Volatility Index (VIX), which measures the volatility in prices of options.  It is often called “the fear index.”  As the VIX rises or as volatility rises, the stock market usually weakens.  As the VIX falls, the stock market strengthens.  Up to a point, that is!  Once the VIX gets low and stays low too long, it suggests the stock market is too sanguine or “asleep at the wheel.”  A certain limited amount of fear is a good thing, not a bad thing.

The last time the VIX was this low was February of 2007,  A year later, the market was down 7.33%.  And, that was only the beginning of a terrible collapse.  This suggests there is no immediate danger.

While history is a poor predictor of stock market behavior, it has been a long time since March of 2009, when the recovery began.  I also cannot forget the old adage of “sell in May and go away.”

Bottom Line:  Extra cash in your portfolio right now might be good for your long term financial health.