A recent Barron’s article quoted a fascinating statistic for numbers nerds like ourselves. Tuesday’s stock bloodbath in the aftermath of the CPI report showed a record number of selling flows. In fact, fewer than 1% of the stocks in the S&P 500 finished higher. According to the article, this has happened only 28 other times since 1940. The index gained an average of 15.6% over the following 12 months, and was higher 79% of the time.
So, what’s next?
This might be a good moment to review our bear market checklist again for a sanity check on how close we might be to the major bottom in stocks.
The bear market checklist To be clear, the aim of the checklist is primarily to instill the discipline and patience for that perfect pitch. It’s by no means an exhaustive list of helpful indicators in determining a market low. A bear market could easily bottom with only 3-4 “checks'' on this list.
On balance, the evidence suggests we have not yet bottomed. At the very least, a re-test of June lows may be in the cards and potentially extending the drop beyond.
Valuations indicators for DIS:NYSE reached a recent low and historically, this led to a median increase in price of 16.11% over the following 6M. TOGGLE analyzed 4 similar occasions in the past to produce the median projection and this insight received 5 out of 8 stars in our quality assessment.
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