Displaying items by tag: bear market
Everyone knows it, but in case you were under a rock, the Dow had its worst day in six years yesterday. At one point the index fell around 1,600 points before recovering to close down 1,175 points, or nearly 5%. The S&P 500 fell 4.1% to close down 7.8% since last Monday. One commentator argues that the market is now in “full price discovery mode”, with no technical supports or trend lines holding whatsoever.
FINSUM: We are five years since the Taper Tantrum, and now it is actually happening. Is this the start of the huge sting everyone has been predicting for years?
So those following the news will have noticed that Bank of America’s key stock market indicator, the “Bull & Bear”, has been flashing red for the last couple of weeks. Now, the brightness is getting stronger. The recent rush out of Treasuries and into stocks has been the fastest ever, which has BAML worried that markets are about to crash. The rotation amounted to $102 bn flowing into stocks in January alone, which BAML calls “massive”.
FINSUM: The move has been more of a stampede than a flow, but then again, there are a lot of reasons to be worried about rising rates, especially as new Fed leadership is coming in.
Okay, we are calling it. Officially. While some had been holding out hope that Bitcoin might regain ground back up to its peak of around $20,000, the bottom appears to have officially fallen out. The cryptocurrency is now trading under $8,000, down around 60% since its peak. The currency continues to suffer setbacks from regulatory efforts in various jurisdictions, and it has put bears firmly in control.
FINSUM: Bitcoin and cryptos will be around for a long time, but the price discovery for a realistic level is going to be painful.
Investors have been waiting anxiously for a downturn in stocks for several months. In recent weeks the nervousness had risen as we had seemed to reach a period of “melt up”. However, the market has fallen considerably over the last couple of days, including the S&P 500 falling over 1% yesterday. The question is whether the tide is finally turning following the rise in concern over surging bond yields.
FINSUM: This was a pretty scary couple of days, but we have a feeling this is not the beginning of the end given strong earnings coming out.
Bank of America has just gone on the record warning investors of a pending S&P 500 meltdown. The bank runs a “Bull & Bear” indicator, and the measure has just reported the strongest sell signal since 2013. The bank says the rush into risk assets this year means a first quarter pullback in the S&P 500 is likely. Investors have been pouring money into stock funds this year, but the excitement has not helped bonds, as they have seen net outflows.
FINSUM: Take this indicator with a heavy grain of salt, since last time it signaled this strongly the stock market went on to gain more than 19% in the following year.