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Bull and bear on balance scale infographic. Symbol of stock market
In over 45 years of following the stock market, I have never heard the term chaos used as a positive for buying stocks. By the Thursday close the S&P 500 was down over 10% which was enough to qualify the decline as a correction. In many discussions or comments on the stock market or economy last week, chaos was often mentioned.
In discussing the stock market’s decline since the February 19th high the term “historic” is now frequently used. A Bloomberg comment on Friday noted that “US stocks just posted their worst start for new administration since the global financial crisis. The dollar is headed for its biggest post-inauguration loss since Richard Nixon began his second term in 1973.”
From the bear market low in March 2009 until February 2020 five declines qualified as corrections. They range from 19% in 2011 which corresponded with the US debt crisis in August and an A/D line bottom in October.
S&P 500 2015-2016
Tom Aspray -
In May 2015, the NYSE All A/D line formed a negative divergence that resulted in a 12% decline that ended in August 2015. That was followed by a 13% decline from 11/3/2015 to 2/11/2016.
A week before the January 2016 low at 1812.29 (line a) the bullish % from the American Association of Individual Investors (AAII) survey dropped to 17.9% which was below the 18.92% reading at the bear market low on March 5, 2009. During the week of January 15, 2016, the S&P 500 also dropped below the weekly starc- band as it did the following week. These oversold readings increased the odds of a rally.
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