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 History Shows the Rewards of Bear Market InvestingIn the previous four worst bear markets (1929–1932, 1973–1974, 2000–2002 and 2007–2008) the market declined 47.9%, 48.2%, 49.1% and 48.5% respectively. Do you notice any similarities? We are right where the market has bounced and, in most cases, experienced a sustained new bull market move. To be fair, the total market meltdown in 1929 greatly surpassed 47.9% after 810 days of depression, but only did so after bouncing almost halfway back from its initial low. The point of this is to say that even if it is different this time (i.e., not just a recession but a depression), history shows the market tends to bounce after such a dramatic fall. |
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Looking into June, the market should begin refocusing on upcoming earnings reports for evidence the economy is gaining momentum.
Watching the Treasury's Actions
In the short-term, the government's bond auction is likely to be a key driver of stocks.
Treasury Auction Boosts Market
The Treasury's auction of two-year notes brought an upside surprise which should alleviate fears of a lack of demand for U.S. paper.
Credit Markets Point to Upturn
The credit market, a reliable indicator of equity direction, suggests we will break out of the SPX's trading range to the upside.
The market seems to be saying that a 30% move up from the lows is ahead of the real economy and the market needs to allow the economy to catch up.
