Issues which have by no means occurred earlier than occur on a regular basis. I don’t know the place I first heard this quote, however paradoxically, it’s the one true iron rule of markets. There aren’t any iron guidelines.
Shares and bonds normally don’t fall collectively, particularly not for a chronic time period. However that’s precisely what’s taking place right this moment.
September was the sixth consecutive month the place shares and bonds have been beneath their ten-month transferring common. The one different occasions such a streak occurred have been in 1931 and 1974. Assuming this pattern stays intact for October, and that’s trying seemingly, 2022 will enter the file books because the longest sustained decline for shares and bonds. And with the yield curve inverted and money providing a comparatively engaging charge of return, buyers are piling in to the nice and cozy blanket of security. We simply witnessed the most important influx to money since April 2020.
Earlier within the week I posted a chart displaying the place the S&P 500 had a 5% bounce in two days within the midst of a bear market.
As you possibly can see, this tends to occur close to the underside, however positively not an all-clear sign. Jonathan Harrier confirmed one thing comparable and put some knowledge behind it. When the S&P 500 had back-to-back 2.5% features whereas beneath its 200-day transferring common, the low was on common 52 days and 16% away. Once more, not on the low, however close to them. The excellent news is a yr later it was larger on all however one event, with a mean acquire of 19%.
We obtained into this and way more on The Compound and Associates with one in every of my favourite company, Nic Colas of Datatrek. You’re going to love this one, I assure it.
