Stocks Week Ahead: Extreme Optimism in Markets Could Meet a Volatility Surge

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Market Overview Analysis by Michael Kramer covering: Euro US Dollar, British Pound US Dollar, US Dollar Japanese Yen, US Dollar Swiss Franc. Read Michael Kramer's latest article on Investing.com

This will be a full week of trading with significant market-moving economic data on the agenda. It begins Monday with the ISMyield finishing at 4.18%. The move lower was driven by Scott Bessent’s nomination as Treasury Secretary. So far, the decline appears to be a standard 38.2% retracement, finding support at the lower Bollinger Band. Could the 10-year yield fall further? Certainly, the possibility remains with the 61.8% retracement level sitting at 3.95%.

The odd thing is that in the fall of 2008, the market was in freefall, with investors apparently trying to find a bottom, pushing dealer positioning to such an extreme. Today, the situation is quite the opposite, with markets climbing higher and investors betting on the continuation of the good times. It’s a polar opposite scenario—an extreme of optimism rather than despair—highlighting the conditions’ rareness.

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