Investors have been in trouble since September. First there was a big tech selloff to kick off the month, and mass markets have since wavered amid concerns about stagnant stimulus and a fast-approaching election. Now, when the bull market officially turned six months on Monday, things may be on a more difficult path.
This bull market is officially 6 months old today (126 business days) and is no longer the best start for a new bull market.
According to LPL Financial’s Ryan Detrick, the current bull market no longer boasts the strongest start in history, although earlier best starts (in 1982 and 2009) saw continued gains in subsequent months (see chart).
As of Monday’s close, the S&P 500 had fallen more than 8% from its September 2 high and posted three consecutive weeks of declines for the first time this year, before managing to bounce around 1% to close Tuesday. .
But according to analysts at Morgan Stanley, the selloff, particularly in tech stocks, may have to move forward despite their roughly 13% drop so far this month. That’s because the high-tech Nasdaq 100 could hover around its 200-day average, writes Morgan Stanley’s chief US equity strategist Mike Wilson, which would spell another double-digit drop from the levels. Current.
For starters, strategists like Detrick have warned that historically, September and October in an election year have been slightly more difficult than the summer months.
However, that doesn’t mean that, in the long run, investors will avoid stocks (especially tech-favorite names) until the end of the year.
But this week has been a market resistance test, as Charles Schwab Vice President of Trading and Derivatives Randy Frederick notes that the S&P 500 must stay above the 3222 level to avoid a technical correction, which would be the first since June.
A close below would put it in correction territory (-10% from the last high of 3,580 on September 2) for the first time since the end of June.
However, stocks managed to combat that level comfortably on Tuesday, with the S&P 500 closing just over 1%.
