“In the book of life, the answers aren’t in the back.” – Charlie Brown
Markets are not easy to navigate, as fear and greed can often get in the way of prudent investment decisions. As much as we would like a script to follow, it isn’t that simple. Much like the quote from Charlie Brown on life, there is no clear answer as to how markets will bottom.
“You can have V-bottoms, W-bottoms, or U-bottoms, for instance; but it appears more likely that this particular bottom may look like a Charlie Brown shirt instead of a letter of the alphabet,” exclaimed Ryan Detrick, Senior Market Strategist. As far as a potential market bottom is concerned, the chart of the day illustrates our belief that we appear to be beyond the alphabet and into Charlie Brown territory:
The last time we saw Charlie Brown-esque volatility like this was in August 2015, and the S&P 500 Index didn’t bottom until February 2016—nearly six months later. The good news is the economic backdrop is much better now than it was then, so we do not expect another four months to pass before the lows are established.
For more of our thoughts on why we believe the economy is on firm footing, be sure to read our recent Weekly Market Commentary focusing on earnings and our recent Weekly Economic Commentary focusing on the employment picture.
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The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
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