The S&P 500 Index has dropped as much as 4% since the Black Friday selloff, and hasn’t had a technical correction of 10% or more all year long. Instead, stocks have had shallow, albeit more frequent pullbacks of 4% to 5%, which are followed by quick rallies. The speed of the bounce-backs is noteworthy. It only takes about half the time to recover lost gains than the drop itself. Today’s Chart of the Day illustrates the dynamic on a logarithmic scale, which shows how steep the moves are. In essence, the dips are being bought at a faster rate than the historical norm. The last time we saw this pace of buying was in 2016, which kicked off two years of solid global growth until the trade war between the U.S. and China began in 2018. If the same dynamic is at work — the whole world growing together out of a pandemic — this could be a good thing.
You can read more about this here on the web. Tell me what you think! Will this continue? And as always thank you for your interest. Feedback is always welcome.