Analyzing the Future: Is the Bull Market Over?

As we are wrapping up March in 2025, the main question on Investor's mind is will the bull market continue as we continue to see weakness from a macro picture, as well as what the chart is telling us.

Macro picture: Our view is that the Trump Administration has communicated that the stock market is not their focus, and their priority is bringing down the 10 years treasury yield. This makes sense, given that the interest payment on the debt has now surpassed $1 trillion dollars. In simple terms, the Trump Administration is telling you that they want an economic slowdown, and they are willing to do it, in order to get the 10 years treasury yield down. Up to this point, no Administration or politician has been willing to tackle the national debt and deficit. Whether they will change course or continue down this path remains to be seen. Add to that is the uncertainty and chaos of various Tariffs announcements and counter measures by other countries. But our key takeaway from this is that we don't believe that the market has fully priced this in yet. We believe that there will be more downside, and investors should take any relief rallies to reduce exposure. If you are a swing trader, there will be trade opportunities, but only those who have strict risk management will succeed.

Volatility Landscape: Volatility continues to remain sticky. The Vix term structure was recently in Backwardation with VIX hitting a high of 28. It has since backed off, but we don't believe the VIX will get back to 12-14 in the near-term future (1-3 months). Our current forward look model is indicating that vol will remain elevated in expansion and contraction mode with a drift upward (trending vol).

Final Thoughts: Putting everything together, our belief is that investors should take any opportunities the market gives us to de-risk. With policy uncertainties, lower growth projections and potential inflation creeping back up, now is the time to preserve capital. The time to buy the dip will come but now is not that time. Our macro regime model indicates that we may see stagflationary regime persist, with pockets of more frequest deflation regime. Our forward look model backs up this thesis and indicates that the US equities market will continue to see further downside.

Note: forward look simulation model is very dynamic and can change frequently. While we continue to refine and find the most stable path, the market is very dynamic and path can certainly change.