Buying the dip often pays off
Since 1980, an investor buying the sp500 index 5% below its recent high would have generated a median return of 6% over the subsequent 3 months, enjoying a positive return in 84% of episodes. Source: Goldman Sachs, Mike Z.
TS Lombard: "Our analysis of past volatility bouts shows that equities take 4-5 weeks, on average, before a sustained recovery begins.
Markets tend to rebound on oversold conditions such as the current ones, but investors often sell into that strength, which can lead to a relapse. This is what happened, for instance, in 2018, an episode that bears strong similarities to the current one." Source: TS Lombard, The Market Ear
BREAKING: The S&P 500 closes 3.0% lower erasing $1.4 TRILLION of market cap today, posting its worst day since September 2022.
The S&P 500 is now just 1.4% away from correction territory. The Nasdaq 100 is in correction territory and will enter a bear market if it falls 7.5% from current levels. In less than one month, the S&P 500 has erased $5 TRILLION in market cap. Source: The Kobeissi Letter
You might wonder why gold is down in a day like today?
diversification does not always work. When margin calls happen everything gets liquidated...
NASDAQ FUTURES CLOSE TO TRIGGERING CIRCUIT BREAKER.
The limit-down level for the current $NQ contract is at 17,265.25, or a 6.9% drop from Friday's close. This has not happened since the COVID selloff in March 2020. Source: Trend Spider
For the history books -> This was the worst day for Japan’s Nikkei stock index since the Black Monday crash of 1987, down 12.4%.
Source: Trading View
JUST IN 🚨: Robinhood suspends 24-hour trading market
Source: Barchart
Volatility is back...
The average S&P 500 stock has seen a 5% one-day move after releasing Q2 2024 earnings. This marks the most volatile earnings season since the 2008 Financial Crisis, according to Goldman Sachs. By comparison, in Q1 2024 and Q4 2023, the average stock moved by ~4% one day after the release. The volatility index, $VIX, is now up ~95% over the last month alone. Volatility is opportunity for traders. Source: The Kobeissi Letter
