And the Volatility Comes Roaring Back

It’s baaack! That’s right, the volatility in the markets is back. After a January that witnessed a big decline in the major indices of more than 3% nearly across the board, the gains this week — the first week of February — now have brought the major indices back into positive territory for 2015.

If we take a look at the chart here of the Vanguard Total World Stock ETF (VT), a fund that represents the entire international and domestic equity market, we see that the trading during the past week now has brought the fund back above both the 50- and 200-day moving averages.

This is significant, as it shows that both international and domestic stocks want to go higher despite the significant headwinds of a slowing global economy, the rising U.S. dollar and tumbling oil prices.

Now, as for those oil prices, this week we saw a significant rebound in the cost of a barrel of crude oil, a welcome change for equities after the massive plunge in the segment during the past six-plus months. The rebound in oil prices helped give markets the sense that global demand wasn’t falling off a cliff, and that was reason enough for money to come back into equities.

Things were much different on the bond front, as we finally witnessed a crack in the bond bull’s hoof. This week the benchmark iShares 20+ Year Treasury Bond (TLT) fell substantially, down more than 4% as money is rotating out of bonds and into equities. An upbeat jobs number released this morning gave traders the idea that the Fed is very likely to raise short-term interest rates by September at the latest, hence the decline in bond prices.

The return of stocks into positive territory for the year, the rise in oil prices and the decline in bonds — all in just one week — show that the volatility definitely is back in financial markets. It also means that you need to be more vigilant than ever when it comes to making sure you have the right mix of international stocks, domestic stocks, commodities and fixed-income assets in your portfolio.

If you are worried about your money, and if you’re concerned about what to make of this volatile market week, then I invite you to check out my Successful ETF Investing newsletter today.

For some time, my readers have been taking advantage of the action in foreign markets, in gold and in fixed-income sectors other than simply traditional Treasury bonds. If you’d like to do the same, then Successful ETF Investing is for you.