If this is a bear market, it's a cute little teddy bear market.
Between Friday and Tuesday morning, as everyone now knows, the Dow Jones Industrials Average fell a massive 2,025 points. The S&P 500 fell over 200 points. The bears were coming out of hibernation! Trump, who touted the Dow's 6,000 points-plus rise as all his doing, is ridiculed for the decline. And yet, despite all the drama, the S&P 500 is only down 0.75% this year. The Dow is down 0.64%. The MSCI World Index is down about the same. That index is mostly developed market stocks. The much riskier MSCI Emerging Markets Index, which will always get bludgeoned in a bear market, is down a whopping 0.5%. Even if every one of these indices fell another 10% we would not be in an official bear market. Emerging markets are down around 9% from their 52 week high registered on Jan. 26.
A bear market is when stocks fall 20% or more from their 52-week peak over a two-month period. In other words, the S&P 500 has to fall another 12.36% between now and April before we're in a bonafide bear market. Until then, investors will be paying attention to the usual economic fundamentals, and the algorithm-based funds and technical guys will be paying attention to the moving averages.
Yesterday's recovery appears to be closely tracking a 15% decline in the CBOE Volatility Index (VIX) since in the pre-market hours. The VIX is up around 8% as we approach noon on Thursday. The S&P 500 is down another 1.3%. Initial resistance is the 50 day moving average in the S&P 500 -- now at 2720 --- and then the 50% retracement level of 2733, which is just 5 points above yesterday’s 2728 high, says chart watcher John Schlitz, chief market strategist at Chaikin Analytics.
Between Friday and Tuesday morning, as everyone now knows, the Dow Jones Industrials Average fell a massive 2,025 points. The S&P 500 fell over 200 points. The bears were coming out of hibernation! Trump, who touted the Dow's 6,000 points-plus rise as all his doing, is ridiculed for the decline. And yet, despite all the drama, the S&P 500 is only down 0.75% this year. The Dow is down 0.64%. The MSCI World Index is down about the same. That index is mostly developed market stocks. The much riskier MSCI Emerging Markets Index, which will always get bludgeoned in a bear market, is down a whopping 0.5%. Even if every one of these indices fell another 10% we would not be in an official bear market. Emerging markets are down around 9% from their 52 week high registered on Jan. 26.A bear market is when stocks fall 20% or more from their 52-week peak over a two-month period. In other words, the S&P 500 has to fall another 12.36% between now and April before we're in a bonafide bear market. Until then, investors will be paying attention to the usual economic fundamentals, and the algorithm-based funds and technical guys will be paying attention to the moving averages.
Yesterday's recovery appears to be closely tracking a 15% decline in the CBOE Volatility Index (VIX) since in the pre-market hours. The VIX is up around 8% as we approach noon on Thursday. The S&P 500 is down another 1.3%. Initial resistance is the 50 day moving average in the S&P 500 -- now at 2720 --- and then the 50% retracement level of 2733, which is just 5 points above yesterday’s 2728 high, says chart watcher John Schlitz, chief market strategist at Chaikin Analytics.
by Kenneth Rapoza, Forbes | Read more:
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