The S&P 500 Index’s historic washout continued yesterday, culminating in nearly a 10% loss for the day, and leaving the benchmark index officially in bear market territory, just 16 trading days after setting a record high on February 19. In addition, the S&P 500 has now moved more than 4% each day this week, leaving investors and professionals alike wondering when this volatility could end. While nobody knows for sure, one thing we always look for at market bottoms are signs of extremes, both from a sentiment and price perspective.
From an anecdotal sentiment perspective, certainly fears of COVID-19 have reached the masses, with travel plans canceled and announcements of major events called off coming nearly every hour. However, investor survey data shows a similar story with the American Association of Individual Investors (AAII) Investor Sentiment Survey showing the highest percentage of bears since April 2013. In addition, the National Association of Active Investment Managers (NAAIM) Exposure Index, which represents the average exposure to US equity markets by the surveyed investment managers, reached its lowest level since September 2015. Following each of those instances, the S&P 500 rallied more than 13% over the next year.
Another way of gauging sentiment can be from the internals of the market. While the S&P 500 is now well below its 200-day moving average, that doesn’t mean each stock in the index has moved below its respective 200-day moving average. In fact, regardless of the broad market’s washout trend, when less than 20% of the individual components of the index are trading below their 200-day moving averages, it is considered an extreme. As shown in the LPL Chart of the Day, Thursday’s sell-off left less 6% of the S&P 500 there, a number last seen in March 2009. “These are truly frightening times,” explained LPL Financial Senior Market Strategist Ryan Detrick. “However, it is important to remember that the signs of panic we are seeing are typically found at or near major market lows.”
Recently, you may have seen reports that a record-low number of homes are available for sale—roughly 1.03 million nationwide. If you compare that to the average number of homes for sale during the past 10 years, it’s no surprise that many hopeful homebuyers are having issues securing a home. But why exactly is the housing … Continue reading “Forces Driving the Housing Market”
It can be exhausting trying to keep up with the whims of Wall Street. Lately, the financial markets have been fixated on federal taxes and what may be proposed on Capitol Hill in the weeks and months ahead. Wall Street’s focus on taxes closely follows its attention on the 10-year Treasury yield. And it wasn’t … Continue reading “The Whims of Wall Street”
President Joe Biden introduced the much-anticipated American Jobs Plan, which outlines an approach to spend roughly $2.2 trillion on the nation’s infrastructure and other projects. As part of the legislative process, the Biden administration also laid out a proposal for paying for the domestic investment. The plan includes raising the corporate tax rate to 28% … Continue reading “Paying for the Infrastructure Bill”
Financially, many of us associate the spring with taxes – but we should also associate December with important IRA deadlines. This year, like 2020, will see a few changes and distinctions. December 31, 2021, is the deadline to take your Required Minimum Distribution (RMD) from certain individual retirement accounts.
There’s an old Wall Street maxim that says, “markets climb a wall of worry.” And these days, there’s plenty to worry about with the trend in long-term interest rates and bonds.
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