Tuesday, April 14, 2020

Equity Markets Defy Emotions

From February 19 to March 23 the S&P 500 Index went from trading at a record high to being down 30.75% for the year, all in the span of 23 trading days. The speed of the decline caught most investors by surprise. In the fifteen trading days since the March 23 low though, the Index is up 27.2% and regained 608 of the 1,148 points lost in the contraction. In spite of the strong recovery, a majority of S&P 500 stocks still trade far below their 50 day and 150 day moving averages. Only 31% of S&P 500 stocks are trading above their 50 day moving average and 21% are trading above their 150 day moving average.

Maybe not surprising to some, but the QQQ's (Invesco QQQ Trust) trade near break-even for 2020. All I can say is most of the world is sitting at home and GDP levels around the world are in contraction: wow. Small cap and mid cap stocks continue to be the laggards relative to their large cap U.S. stock counterparts as seen in the below charts.

Let's be honest, the magnitude of this recovery off of the March 23 lows is a bit surprising and some might say that is exactly why the bounce has occurred. Many have been calling for a retest of the March low, which may still occur. I will end this post with an article by Michael Batnick, who writes commentary at The Irrelevant Investor, as he may have summed up the emotions of many in his recent article titled, I'm Struggling Here.

No comments :