- Stocks likely reached a bottom on the day of the S&P 500’s big swing sparked by the September inflation report, said Carson Group.
- Ryan Detrick, chief market strategist, stated that “the action of last Thursday had some the hallmarks of an capitulation low.”
- The S&P 500 has been recovering after hitting a 52-week low during the wild October 13 session.
October may still prove to have been a bear-market killer. Stocks likely hit a bottom the day before. S&P 500’sAccording to one market strategist, there was a big swing after the US inflation report.
Ryan Detrick, Carson Group’s chief market strategist, wrote in a note that “The action last week had some of the hallmarks a capitulation lower.”
He attracted readers back to The On October 13, there will be a wild session, when the S&P 500 logged an intraday swing of more than 5%, after erasing steep early losses to finish up by 2.6% at 3,669.91.
The S&P 500 hit a 52-week low of 3,491.58, and sessions such as that have marked “major turning points” for stocks, he said. The most recent example was in March 2020 when the S&P 500 began recovering from a 9.5% one-day plunge spurred by panic over the COVID-19 pandemic.
The shock September inflation report, which was the catalyst for Thursday’s slide, was the Core CPI readingIt was 6.6% higher than the 6.5% Bloomberg consensus estimation. The Federal Reserve will likely raise the rate by 75 basis points at its December meeting. Nearly twice the numberAfter the CPI report.
“In the history bear markets, it is safe for us to say that stocks have never bottomed on bad news. The news is always terrible.” Detrick said that Thursday morning was like that.
Detrick found that bear and near bear markets have been traced back to World War II. Six of those 17 ended in October with an average decline 29.6% and lasting approximately a year.
“The current bear is at 25.4%, 9.3 months and is in range for history to tell us it is normal,” he stated.
Carson Group
He also pointed out that the S&P 500’s retracement of 50% of the previous bull market near 3,500 is a common level where investors have stepped in to bargain hunt. “Multiple times in the past decade, this trendline was support,” said he.
Meanwhile, fewer stocks last week made 52-week lows than when the S&P 500 reached a low in mid-June.
Detrick stated, “Simply put it, if less stocks are falling, it is difficult for the index to continue going lower.” “The stage could well be set for a well-deserved Fourth-Quarter rally,” Detrick said.
On Friday, the S&P 500 was higher at 3,677 as trading got underway after futures suggested a decline for the broad-equity index.
