You know we’re in for a rough session when the Nasdaq, Dow Jones and S&P 500 dip more than -3% overnight.
The risk-off attitude was exacerbated in cryptocurrency markets, which in my opinion, is a useful indicator for risk-assets. Bitcoin copped its biggest decline since January, down -8% to a near 4-month low of US$36,500.
In terms of the year-to-date performance of major indices:
Nasdaq -22.2%
S&P 500 -13.5%
Dow Jones -9.8%
ASX 200 -3%
The tech-heavy Nasdaq has deteriorated from a garden variety pullback in early January, to a correction by February and now the beginning of a bear market.
The ASX 200 has managed to outperform but mainly due to its defensive composition of three iron ore miners, five banks, Wesfarmers (ASX: WES), Telstra (ASX: TLS), and Woolworths (ASX: WOW).
SentimenTrader has provided some pretty interesting insights for how the S&P 500 is tracking this year. Let's take a look.
“There have been 2 days in the past 25 years when S&P 500 futures were down -3% and 10-year Treasury futures down -1%.”
October 9, 2008
S&P 500 fell another -32% to bottom on March 9, 2009
March 18, 2020
S&P 500 fell another -8.6% to bottom on March 23, 2020
Another interesting set of numbers was how the S&P 500 was struggling to hold onto gains. In 2022:
Average return after a down day -0.18%
Average return after an up day -0.16%
This is not a rewarding year for both dip buyers and rally chasers.
The sudden bearish turn for markets has left many investors praying for a bounce.
Unfortunately, a bounce might not be something to cheer for as they've only been triggered during bear markets.
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