What can you expect from the stock market? There will always be a multitude of different opinions worth listening to, but you might want to look at the market and form your own opinions too. These top stock market indicators have a tale to tell, and there’s a lot to be learned from watching them!
1. The VIX Index
Knowing how to work with the VIX index takes knowledge and nerves of steel. Top financial experts like Jeremy Wien even build their careers on it. But even a newbie can use the VIX to gauge the levels of uncertainty in the market. Its proper name is the Chicago Board Options Exchange Volatility Index, but it has been dubbed the “fear index.”
Volatility in the market occurs when share price movements are expected to move up or down quite regularly and often, unpredictably and frequently. The VIX indicates how volatile investors expect the stock market to be within the next 30 days. If the rating is high, investors are feeling nervous about market volatility. If it’s low, plain sailing is expected.
Another chart that could be useful is the german dax chart which represents the performance of the 30 largest companies listed on the Frankfurt Stock Exchange in Germany. By tracking stock price movements and calculating indexes regularly, the DAX chart helps inform investors about real-time changes in the dynamic market environment in Germany. Analysing this chart can help understand current market trends and make decisions about potential investments. Whether you are an experienced investor or just beginning to learn about stock markets, studying the German DAX chart can offer invaluable insights.
2. An Inverted Yield Curve
If you’re looking for signs of trouble in the economy, an inverted yield curve is a sign that it’s on the way. The yield curve reflects the interest paid on bonds, a form of long or short-term IOU issued by governments and occasionally, by large corporations. These investments are considered safer than stocks and shares, but when the yields on the longer-term ones drop below that of the shorter-term bonds, you have an inverted yield curve and that almost invariably indicates an approaching recession.
3. Corporate Earnings
The prices of shares are based on the expectations of future earnings each listed company will make. When earnings fall, or are expected to fall, it’s usual for share prices to follow suit. Expert investors have entire teams of people working on analyzing the financial health of businesses so that they can make a call on which way share prices are expected to move and they make investment decisions based on that. Even as a layperson, you can spot falling corporate earnings and spot a warning sign you ought to consider carefully.
4. Consumer Confidence
When consumers hold back on spending because they lack the confidence to do so, the markets are bound to suffer. After all, they’re responsible for 60 percent of global spending. When consumers become anxious about their financial outlook, they’re less likely to spend money on luxuries, and they may even try to hold back on basic necessities as much as they can.
With less income to be made, businesses start to struggle, and with corporate earnings down, share prices are also likely to fall. This, in turn, makes consumers even more anxious to save money, and the result can be a recessionary spiral.
The Good News: Markets Recover
Being an investor can be nerve-wracking, but knee-jerk reactions to the vagaries of the stock market could lose you a lot of money. When markets do recover, they move fast and you could miss the boat. The smart way to invest is to hang in there, ride out the rollercoaster, and take a longer-term view. All the same, these indicators make for interesting watching, and if you’re about to invest, they can tell you whether it’s a good time to stake your savings.
