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.”
When you lose a spouse, partner, or parent, the grief can be overwhelming. In the midst of that grief, life goes on. There are arrangements to be made, things to be taken care of – and in recognition of this reality, here is a checklist that you may find useful at such a time. If … Continue reading “Estate Planning Checklist for When a Spouse or Parent Passes”
The first week of 2021 has already had many ups and downs. Just because it’s a new year doesn’t mean that the 2020 issues go away, and so far, 2021 has been no exception to this rule. The markets opened on January 4 and traded lower out of the gate, with the S&P 500 dropping … Continue reading “2021 Opens With a Bang”
A new year offers a welcomed turn of the calendar and a fresh start. However, it’s difficult to put 2020 completely behind us just yet because the COVID-19 pandemic still presents a significant threat. Healthcare workers continue to perform heroically, while the rest of us must continue to make sacrifices until vaccines are widely distributed. … Continue reading “Market Update: 2021 Brings a Fresh Start”
After a bit of political posturing on stimulus details in December, the $900 billion Consolidated Appropriations Act of 2021 (2021 CAA) was signed into law by President Trump as the COVID-19 pandemic continues to impact employers and employees. Here’s a quick recap of five key highlights providing stimulus to those that need it:
Financially, many of us associate April with taxes – but we should also associate April with important IRA deadlines. From current and previous IRA contribution deadlines, to RMD deadlines, keep an eye on the calendar. April 15, 2021 is the deadline to take your Required Minimum Distribution (RMD) from certain individual retirement accounts. Keep in … Continue reading “IRA Contribution Deadlines are Approaching”
Epic Capital provides the following comprehensive financial planning and investment management services: Learn More >