a V bottom?

technician Urban Carmel of The Fat Pitch blog recently undertook a study of 10% drops in the S&P back to 1980.  (In order to capture more cases, he didn't draw the line precisely at 10%, but stayed close to that mark.)

In all, there were 25 instances of an approximately 10% decline in the index.  Of these, only 16% resulted in a V-bounce where the original low for the move was never revisited.


In the other 84% of the situations, the market returned to test its lows.  So the odds are strong, on the historical record at least, that the S&P will creep back to the area of its February 8 closing low (2581) before the market can resume its climb to new all-time highs.

-- Richard Band, 2/15/18

bull and bear markets

Take the long view.

Markets typically go up and down, and you’re likely to experience several significant declines during a long investing career. But even bear markets—that is, periods when the market fell by more than 20%—historically have been relatively short.

The Schwab Center for Financial Research looked at both bull and bear markets, based on the S&P 500 Index, going back to 1966, and found that the average bear market lasted a little longer than a year (505 days). The longest of the bears was roughly two and a half years (915 days), and it was followed by a nearly five-year bull run.

Timing the market’s ups and downs is nearly impossible, but all investors would do well to ignore the noise and stay focused on their plans.