Did We Just Have A Bear Market Rally? | News or Noise?

Viewers, apparently, many stock strategists and TV financial news commentators are taking their cues from politicians nowadays.  What do I mean?  I mean, they are of the belief that if you say something enough times on TV, regardless of whether it is factually correct or not, it is truth or, it will become truth, or you won’t be challenged on your factually incorrect statements. 

I’m Chris Perras, Chief Investment Officer with Oak Harvest Financial Group.  And This is our investment team’s mid-week release when we examine a news item, headline, or story making the rounds from publicly available sources, and ask, “Is it News or Noise?” This week’s topic?  Well, it is the market’s recent near-vertical rally in the second half of March.  This is a rally that many strategists on TV  are saying is “just a bear market rally.” 

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Viewers, one of my favorite movies of all time is John Cusack’s “Say Anything.” Apparently, nowadays, much the same way politicians from both political parties can and will say anything to garner a few extra votes, equity and stock market strategists and commentators on TV can say anything and get away with it, unchallenged, even if the statement is factually incorrect. 

What am I talking about?  I’m talking about the ongoing parade of bearish biased analysts and strategists on TV over the last two weeks, dismissing the recent rally in the S&P500 as “just a bear market rally.” Viewers it was not a “bear market rally.” How do I know?  Because everyone, and I mean everyone I know in the industry, or who has read books about the stock market, has chosen over the years and decades to mathematically define a “bear market” as a -20% or greater decline in the S&P500. 

Viewers, we’ve discussed these arbitrary definitions in the past.  I didn’t come up with this number.  I didn’t just make it up.  However, It’s been used as the line in the sand as a measurement tool by market statisticians for decades in the stock markets.  So far, if you top ticked the best sale in the S&P500 cash market and bought the lowest intraday cash price on February 24th, the market, as defined by the S&P500, dropped -14.6%.  If, instead, you use the daily closing prices, it was -13%.  Is that -20% or greater?  Not the last time I checked. 

Did other more growth-oriented indexes drop into their own bear market of -20% declines or more?  Yes, for sure.  Individual stocks?  Yes, hundreds if not thousands of them.  But was it the S&P 500, which is what these strategists are alluding to?  No, the S&P 500 didn’t get there.  Which is why I can say, with absolute certainty, which is almost impossible to say with a straight face when talking about stocks, that the recent rally was NOT a bear market rally.  Why?  Because statistically, the S&P500 has yet to enter its own bear market decline since the Covid rally started in the second quarter of 2020. 

 Will, over the upcoming weeks and months, the S&P500 index decline into bear market territory this year?  That would be over 20% from peak to trough.   My opinion, and it’s only my opinion, is that this size decline remains highly unlikely this year for the S&P500 max drawdown.  But of course, time will tell because you can only legitimately declare a rally as a “bear market rally” after you have had a “bear market” sized % decline. 

Viewers, in my opinion, this term being thrown around is 100% noise and is being used by others to provoke fear into investors’ minds.  Recall that only four weeks ago, many of these same individuals were on TV throwing around the “death cross” terminology on the market lows on February 24th.  Did that help you and your money one bit? 

Viewers, I’m Chris Perras, Chief Investment officer at Oak Harvest, and whether the markets are in a bull market trend, an ongoing market correction of between -10-20%,  or one day down the road, a true bear market, give us a call here at  (877) 896-0040, ask to speak to one of our advisors, and let us help you navigate your retirement because the future is always unclear and uncertain,  regardless of what other investors call it!  From the whole team here at Oak Harvest, have a great week. 

News or Noise? Noise!

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