It is a Hitchcock Horror

Issues which have by no means occurred earlier than occur on a regular basis. I don’t know the place I first heard this quote, however paradoxically, it’s the one true iron rule of markets. There are not any iron guidelines.

Shares and bonds normally don’t fall collectively, particularly not for a protracted time frame. However that’s precisely what’s taking place as we speak.

September was the sixth consecutive month the place shares and bonds had been beneath their ten-month shifting common. The one different occasions such a streak occurred had been in 1931 and 1974. Assuming this pattern stays intact for October, and that’s wanting doubtless, 2022 will enter the file books because the longest sustained decline for shares and bonds. And with the yield curve inverted and money providing a comparatively engaging charge of return, buyers are piling in to the nice and cozy blanket of security. We simply witnessed the biggest influx to money since April 2020.

Earlier within the week I posted a chart displaying the place the S&P 500 had a 5% bounce in two days within the midst of a bear market.

As you’ll be able to see, this tends to occur close to the underside, however positively not an all-clear sign. Jonathan Harrier confirmed one thing comparable and put some information behind it. When the S&P 500 had back-to-back 2.5% good points whereas beneath its 200-day shifting common, the low was on common 52 days and 16% away. Once more, not on the low, however close to them. The excellent news is a 12 months later it was increased on all however one event, with a median achieve of 19%.


We acquired into this and rather more on The Compound and Mates with one among my favourite friends, Nic Colas of Datatrek. You’re going to love this one, I assure it.