Stock investors are facing a series of unpredictable outcomes and confusing market signals. For the current situation, the best choice for investors may be to wait for the situation to become clear before investing.

The situation in the United States is tense, and the European corporate earnings season has started to improve after a poor start. Interest rates are unsettlingly rising, and the market seems to be caught between hedging against a decline and preparing for a rise. The momentum of benchmark stock indices is cooling, but it has not turned negative. There are also no signs that the current consolidation is evolving into a deeper adjustment.

It is currently difficult to find clues from thematic positioning. Large technology companies have recently fluctuated, causing the stock market to lose strong upward momentum. The lower quality parts of the market, such as unprofitable technology stocks and high short stocks, have performed poorly. Those that will benefit from inflation and stagflation, as well as cyclical stocks, are leading the rise.

Volatility has recently increased. Although most of the record highs of the S&P 500 this year have occurred when the VIX index is low, the record highs set in recent weeks have been accompanied by greater price fluctuations. Strategists at Tier 1 Alpha said: "Periods of increased volatility in a bull market do not necessarily cause concern, but are a sign of a mature rebound."

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This paves the way for a potential rebound, which depends on the results of several coin toss events. History has shown that volatility should weaken in the last few days before the vote on November 5th. But for now, the range of results seems wider than ever.

Amundi SA's Chief Strategist Monica Defend wrote: "Most importantly, it will only be clear after the election which policies will be implemented - apart from the election rhetoric - or whether Congress will agree to enact these policies."

At the same time, the dynamics of the earnings season are also constantly changing. Strong earnings reported by Hermes and Unilever (UL.US) indicate that there will eventually be good news in the luxury and consumer goods sectors. From a broader perspective, analysis shows that despite adverse factors in revenue, companies are still making profits.

Investors have been willing to reward companies with strong performance, and there has not been much punishment for companies with poor performance. Christoph Mertens, Portfolio Manager at Fuerst Fugger Privatbank AG, said that low thresholds create space for surprises, "some companies have been able to take advantage of this."

Marc Decker, Co-Head of Equity Business at Merck Finck, pointed out that 74% of U.S. companies have outperformed expectations, while about half of European companies have outperformed expectations. The key fulcrum of profits - which is also a difficult fulcrum to determine - is the data of large technology companies. He said: "Stock prices and valuation multiples can undoubtedly be considered quite high. So are investors' expectations. Although some people are looking for alternatives outside of large technology companies, this has not yet developed to the point of completely abandoning the technology industry."

Considering all of this, the market direction is still driven by events, and the market may remain unstable as traders digest one news after another. Hedging investors' positions may limit the scope of losses, but the unknown impact of earnings and the direction of interest rates may make things chaotic by the end of the year.In this scenario, Mertens advises maintaining optimism while diversifying investments adequately. He says that investors should keep cash on hand to seize potential opportunities, as there are bound to be some significant moves in the coming days.