The Dow Jones industrial average has been falling lately, and its latest fall has been a wake-up call for Wall Street analysts.
But a new study shows that if you use stock trends as your primary metric, the stock market could be even more volatile.
The report, which was prepared by Bloomberg Intelligence, uses stock trends to estimate the volatility of the Dow, and it comes after the company warned that the trend could be at a “near-term record low” in 2017.
The report also argues that there’s been a surge in short-selling activity in the last month, which suggests that short-sellers are taking positions for now.
The rise in short selling has also raised questions about whether there’s enough short-term liquidity to be a catalyst for a correction.
Bloomberg Intelligence also analyzed the last two years of stock trends and found that the Dow is at its lowest point in over two decades.
“The Dow is down around 30% since the beginning of 2018, while the S&P 500 is down at a record low,” the report said.
“Short-selling is a problem, but it is not the catalyst that many people think.”
The report also pointed out that the S &L trend has fallen off a cliff, but the volatility is still at record highs.
“We believe the Dow will hit a record high before the end of 2020,” the company wrote.
“We have long predicted the Dow would hit a new low of around 6,000 this year,” the Bloomberg report added.
“But with the market’s recent performance, we are now convinced the market will hit its record high of 6,200 by year-end.”