Where Do We Go From Here?
“Volatility is the price of admission for those who wish to ride the long-term wealth creation train.” — Anonymous Trader
Markets just suffered their worst week in a year.
Equities are teetering at critical support levels, and investors everywhere are asking the same question: What happens next?
Brent Johnson, known for his sharp macroeconomic insights, just walked through the very signals he personally studies to navigate choppy waters.
His analysis reveals a landscape of uncertainty, with some critical signposts that demand attention.
For those who follow Johnson closely, this isn’t the first time he’s performed this exercise.
Back in August, in an episode titled The Anatomy of a Trade, he dissected the same indicators, which proved invaluable at the time.
Now, as he sits at a Hugh Hendry’s house for a birthday celebration, far from his usual setup, he takes a moment to share his latest thoughts.
It’s a rare glimpse inside the mind of a seasoned investor processing a market that, for now, is walking a tightrope.
A Slow-Boiling VIX
As Johnson shares his Bloomberg terminal, the first chart that fills the screen is the VIX—Wall Street’s so-called "fear gauge."
Over the past year, it has seen its fair share of spikes, typically short-lived episodes that evaporated within days. But this time, something is different.
"The VIX has been rising steadily for two weeks," Johnson observes. "We’re not seeing the usual spike-and-retrace pattern. Instead, it’s a slow grind higher. That tells me the market isn’t just panicking—it’s adjusting to a new reality."
A higher VIX, absent a sharp market collapse, suggests deeper unease among investors. Does this signal a slow bleed lower, or is a capitulation event still ahead?
Equities Hanging by a Thread
Johnson then flips to the Dow Jones Industrial Average.
His screen illuminates a year-long chart, showing a white line representing price movement, weaving its way through three critical moving averages: the 50-day, 100-day, and 200-day.
"The Dow is still clinging to its 200-day moving average," Johnson notes. "Relative strength is in no man’s land, but the momentum indicators are starting to look weak. If this breaks, things could accelerate downward."
Next up, the S&P 500. The pattern is similar, but this time, there’s no buffer left.
"The S&P closed right on its 200-day moving average. It’s sitting at a key support level, and these tend to act as battlegrounds. If we lose it, expect fireworks."
Then comes the NASDAQ, where things look even worse.
"The NASDAQ has already broken below its 200-day moving average. Momentum is gone. Relative strength is low, but not extreme. It’s in a dangerous spot."
Sentiment and Positioning: Not Quite There Yet
One surprising element in Johnson’s analysis? The put-call ratio.
"Frankly, I would have expected a lot more put buying given the market action," he says. "But it hasn’t happened yet. That suggests we may not be at peak fear. We may have further to go."
If sentiment were truly washed out, we’d see panic selling, a spike in volatility, and an explosion in put buying. But the data isn’t quite there.
So what does this mean for investors positioning for the months ahead? Brent Johnson unpacks the potential scenarios that could unfold—and where he sees opportunities forming. Read on to get his full breakdown.
A 2022 Redux?
Johnson’s base case for 2025 is 2022.
"I think we’re going to see a choppy, downward-trending market. We’ll get bounces, but they’ll be sold. The biggest rallies often happen in bear markets, so don’t be fooled by sharp upside moves. The overall trend is likely lower."
With a new administration in office, uncertainty surrounding economic policy, and a shifting geopolitical landscape, markets may be in for a rollercoaster year.
Looking for Opportunities
Where does he see opportunities?
Johnson has been rolling down put positions, taking profits along the way, and has started to eye new short opportunities.
"We’ve begun to buy puts on the Hang Seng and the DAX. Hong Kong equities are still near highs, but momentum is starting to roll over. Same with Germany. These could be the next shoes to drop."
The Dollar, Gold, and Copper: The Contradictions Mount
The dollar’s recent weakness has been notable.
Typically, risk-off conditions push the dollar higher, but that hasn’t happened this time.
"The dollar just broke below its 200-day moving average. That’s unusual in a risk-off market. If risk assets keep falling, I’d expect the dollar to bounce."
Gold, on the other hand, has held steady, while silver’s commercial short positions have been building.
Meanwhile, copper has been rallying, despite expectations that an economic slowdown should pressure industrial metals.
"Copper’s strength is curious. Either the market is betting on a big China stimulus package, or it’s worried about supply disruptions. Either way, it’s a space to watch."
The Road Ahead
With equities at key support levels, sentiment not yet at extremes, and volatility rising steadily, Johnson’s outlook remains cautious.
"I wouldn’t be surprised if we get a short-term bounce, maybe a down Monday followed by a mid-week rally. But my base case is that we break these levels and head lower. If you’re looking for a turning point, you want to see real panic—a spike in the VIX, extreme put buying, and oversold sentiment. We’re not quite there yet."
Volatility and realpolitik will be the defining themes of 2025. The question is not whether the market will move—but in which direction, and how violently. Buckle up.
Visit our subscribe page to upgrade to our pro service. Get access to exclusive deep-dive reports and two monthly Q&As with Brent Johnson.
Discover how to navigate today’s overheated markets, uncover hidden value, and keep your clients confident in your expertise.
Everything in this service is for educational and entertainment purposes only and NOT investment advice. If you act on anything provided in this offering, you are doing so based on your own research. Nothing in this service is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this service. Before making any investment decisions, talk to a financial advisor.
Share this post