Wednesday, July 21, 2021
Time for a more significant pullback or correction?
Stocks have had an amazing run, but here are some things to consider.
- The S&P 500 Index hasn’t had a 5% pullback since last October, right before the election, one of the longest such streaks ever.
- The S&P 500 has averaged about three separate 5% pullbacks per year since 1950.
- In fact, the index hasn’t had a 10% correction since March 2020 and it has averaged exactly one 10% correction per year since 1950.
- We’ve previously noted some concerns including: a weak Q3 historically, the lack of any pullback after a 90% rally, weakening internals, and some pockets of excessive optimism.
We will discuss this concept more in depth later today on the LPL Research blog.
US equities little changed after yesterday’s big rally
- Market participants are focused on positive second quarter earnings reports amid concerns of increased Delta COVID-19 cases.
- European equities are higher through midday trading ahead of tomorrow’s European Central Bank (ECB) policy meeting, with the ECB expected to continue quantitative easing efforts.
- Asian markets posted a mixed close amid a positive South Korea July export report.
After the worst day of the year for the Dow and one of the worst of the year for the S&P 500, stocks bounced back nicely yesterday.
- As we mentioned in the technical note below, the S&P 500 once again found support at the upward sloping 50-day moving average.
- It was the third consecutive time the S&P 500 fell 1%, then bounced back with a 1% gain.
- The previously beaten up areas like banks, small caps, and cyclicals all had large bounces.
- Stocks surged back yesterday, with the S&P 500 bouncing off its 50-day moving average yet again and recording its best day since March 26.
- The advance was broad-based, as advancers outnumbered decliners by more than 9:1 on the NYSE.
- The Russell 2000 also bounced off support near 2100 and gained 3%, its best day since early-March.
Midyear Outlook 2021 has launched. While the speed can be exhilarating as economic growth accelerates, it can also be dangerous. Midyear Outlook 2021: Picking Up Speed is designed to help you navigate the risks and opportunities brought upon by the economy’s reopening for the rest of 2021 and beyond. For more information, please read our Midyear Outlook 2021.
Street View Midyear Outlook 2021
In the latest LPL Street View video, LPL Financial Chief Market Strategist Ryan Detrick takes a closer look at what the LPL Research team thinks is coming in the second half of 2021, with a special focus on the economy, policy, stocks, and bonds.
LPL Research in the Media
LPL Financial Chief Market Strategist Ryan Detrick joined Yahoo! Finance recently to discuss market trends. He was also quoted in Axios.
Midyear Outlook 2021: Picking Up Speed
LPL Research provides an overview of their forecasts on the economy, policy, stocks, and bonds for the rest of 2021 and beyond. Learn more in this week’s Weekly Market Commentary.
Mr. Powell Goes To Washington | LPL Market Signals
In this week’s LPL Market Signals podcast, LPL Research’s Chief Market Strategist, Ryan Detrick and Equity Strategist, Jeff Buchbinder discuss the start of earnings season, policy, and more.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
All index and market data are from FactSet and MarketWatch.
This Research material was prepared by LPL Financial, LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.
- Not Insured by FDIC/NCUA or Any Other Government Agency
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value
For Public Use – Tracking # 1-05170307