{"id":52714,"date":"2025-03-18T14:22:05","date_gmt":"2025-03-18T14:22:05","guid":{"rendered":"https:\/\/mycryptomania.com\/?p=52714"},"modified":"2025-03-18T14:22:05","modified_gmt":"2025-03-18T14:22:05","slug":"sp-500-did-the-stock-market-make-a-major-low","status":"publish","type":"post","link":"https:\/\/mycryptomania.com\/?p=52714","title":{"rendered":"S&P 500: Did the stock market make a major low?"},"content":{"rendered":"

Developments around tariffs and trade wars along with a large spike in announced job cuts are clouding the economic\u00a0outlook<\/strong>.<\/p>\n

Inflation expectations are surging higher as well<\/strong>. An updated consumer sentiment report from the University of Michigan showed consumers\u2019 12-month inflation expectations jumped to 4.9%<\/strong>. That\u2019s the highest level since November\u00a02022.<\/p>\n

Growing questions around the economy and earnings outlook sent the S&P 500 into correction territory for the first time since 2023<\/strong>. While the index dropped as much as 10% from the all-time high set on February 19, the pullback in the average stock has been even\u00a0worse<\/strong>.<\/p>\n

At one point last week, nearly half of all the stocks in the S&P 500 fell into their own bear market with a drop of 20% or more from their 52-week high<\/strong> as you can see in the chart\u00a0below.<\/p>\n

Chart from Liz Young Thomas<\/a> on\u00a0X<\/p>\n

But just as the S&P 500 was tipping into correction, several conditions are emerging for a rally to unfold<\/strong>. That include extreme bearish investor sentiment across numerous surveys, and oversold breadth levels that we\u2019ve been tracking over the past\u00a0week.<\/p>\n

And right on cue, the S&P 500 saw its largest one-day percent gain since early November<\/strong>. The question now focuses on the ultimate path forward, and if we\u2019re going to see just a dead cat bounce or a more durable bottom\u00a0form<\/strong>.<\/p>\n

This week, let\u2019s look at the historic path forward for the S&P 500 following a 10% correction<\/strong>. I also want to show you a key metric to watch in the week ahead that increases the odds we\u2019ve seen the end of the correction, and how inflation concerns are driving a major breakout.<\/p>\n

The Chart\u00a0Report<\/h3>\n

As the S&P 500 dropped into correction territory last week, more signs of extreme fear and capitulation were emerging<\/strong>. I\u2019ve previously covered the inverted VIX term structure, extreme pessimism in the AAII bull-bear spread, and the Investors Intelligence advisor survey showing bears outnumbering bulls for the first time since 2022\u2019s bear market. Another metric showing how investors are betting with their own money is showing heightened fear<\/strong> as well. That\u2019s with the CBOE equity put\/call volume ratio that rose above\u00a0.90 last week<\/strong>, which is a level that has marked prior lows during pullbacks over the past\u00a0year.<\/p>\n

Chart from Seth Golden<\/a> on\u00a0X<\/p>\n

In less than a month, the S&P 500 fell into correction territory after setting an all time high on February 19. That\u2019s the fifth fastest correction in history<\/strong>, with other past instances resulting in a quick rebound and higher index levels three- and six-months out<\/strong>. A rally from here would also line up with historical seasonal patterns. Over the past 20 years on average, the S&P 500 has pulled back from mid-February into March. The S&P tends to see its low for the year during the second week of March, with bullish seasonal trends now persisting into\u00a0May<\/strong>.<\/p>\n

The correction in the S&P 500 is being driven by a decline in valuation measures<\/strong> (like the price-to-earnings ratio) up to this point. But the forward path for the S&P 500 will now come down to the potential for a recession and impact to the earnings outlook<\/strong>. The chart below shows how the S&P performs following a correction, and is conditional on the occurrence of a recession within 12 months. As long as a recession is avoided and the earnings outlook stays intact, forward returns are strong for the S&P 500<\/strong> following a correction as you can see with the dark blue bars. The light blue bars show average returns if a recession hits within the next 12\u00a0months.<\/p>\n

Chart from Mike Zacarrdi<\/a> on\u00a0X<\/p>\n

Institutional demand for stocks is needed to support a bottom and help the rally resume<\/strong>. Breadth thrusts are a way to track institutional activity through extreme levels of advancing stocks relative to declining issues. On Friday\u2019s rally, the NYSE advance\/decline (A\/D) ratio nearly hit 9\/1<\/strong> (chart below). That\u2019s at the low end of what I would consider a breadth thrust, but still points to elevated institutional involvement. A cluster of strong A\/D ratios in the coming weeks would deliver more evidence that institutions are scooping up shares and signal that the lows are\u00a0in<\/strong>.<\/p>\n

The past week featured a mixed bag of news on the inflation front. Updated reports on consumer and producer inflation were less than expected in February<\/strong>. The Consumer Price Index rose by 2.8% compared to estimates for 2.9%. The Producer Price Index gained by 3.2% versus estimates for 3.3%. Core measures for the CPI and PPI were less than expected as well. But a consumer sentiment survey by the University of Michigan showed consumers\u2019 inflation expectations rising to 4.9%, which is the highest since November 2022<\/strong>. The chart below plots inflation expectations overlaid with CPI, and hints at higher inflation levels\u00a0ahead.<\/p>\n

Sectors sensitive to inflation are building on recent breakouts, or staging rebounds above key levels. Gold prices touched $3,000\/oz for the first time ever<\/strong>, and silver prices are hovering near the highest levels in over a decade. There are also signs that mining sector stocks are set to join the breakout in precious metals<\/strong>. After hitting the $43 level in 2020, GDX spent the next five years below that level (chart below). But in recent months, GDX is testing that level again and is finally starting to push above resistance<\/strong>. Historically, mining stocks are one of the best performing sectors during high and rising inflationary environments<\/strong>.<\/p>\n

Heard in the\u00a0Hub<\/h3>\n

The Traders Hub features live trade alerts, market update videos, and other educational content for\u00a0members<\/strong>.<\/p>\n

Here\u2019s a quick recap of recent alerts, market updates, and educational posts:<\/p>\n

A detailed look at why we could\u2019ve seen the\u00a0lows.<\/strong>My top four trade ideas to take advantage of a\u00a0rebound.<\/strong>A panic signal coming from volatility markets pointing to a\u00a0bottom.<\/strong>Trading the breakout in gold mining stocks from a five-year basing\u00a0pattern.<\/strong><\/p>\n

You can follow everything we\u2019re trading and tracking by becoming a member of the Traders\u00a0Hub<\/strong>.<\/p>\n

By becoming a member, you will unlock all market updates and trade alerts reserved exclusively for\u00a0members.<\/p>\n

\ud83d\udc49You can <\/strong>click here to join\u00a0now<\/strong><\/a>\ud83d\udc48<\/strong><\/p>\n

Trade Idea<\/h3>\n

Anglogold Ashanti\u00a0(AU)<\/p>\n

Gold miner forming a basing pattern after hitting the $33 level last August. Recently testing that resistance level again, and making a smaller pullback. That\u2019s resetting the MACD at the zero line, while price is near its 52-week high. I\u2019m watching for a breakout over\u00a0$34.<\/p>\n

Key Upcoming\u00a0Data<\/h3>\n

Economic Reports<\/em><\/p>\n

Earnings Releases<\/em><\/p>\n

I hope you\u2019ve enjoyed The Market Mosaic, and please share this report with your family, friends, coworkers\u2026or anyone that would benefit from an objective look at the stock\u00a0market.<\/p>\n

Become a member of the Traders Hub<\/strong> to unlock access\u00a0to:<\/p>\n

\u2705Model Portfolio<\/strong><\/p>\n

\u2705Members Only\u00a0Chat<\/strong><\/p>\n

\u2705Trade Ideas & Live\u00a0Alerts<\/strong><\/p>\n

\u2705Mosaic Vision Market Updates +\u00a0More<\/strong><\/p>\n

Our model portfolio is built using a \u201ccore and explore\u201d approach, including a Stock Trading Portfolio and ETF Investment Portfolio.<\/p>\n

Come join us over at the Hub as we seek to capitalize on stocks and ETFs that are breaking\u00a0out!<\/strong><\/p>\n

Come join the\u00a0Hub!<\/a><\/p>\n

Disclaimer: these are not recommendations and just my thoughts and opinions\u2026do your own due diligence! I may hold a position in the securities mentioned in this\u00a0report.<\/em><\/p>\n

S&P 500: Did the stock market make a major low?<\/a> was originally published in Coinmonks<\/a> on Medium, where people are continuing the conversation by highlighting and responding to this story.<\/p>","protected":false},"excerpt":{"rendered":"

Developments around tariffs and trade wars along with a large spike in announced job cuts are clouding the economic\u00a0outlook. Inflation expectations are surging higher as well. An updated consumer sentiment report from the University of Michigan showed consumers\u2019 12-month inflation expectations jumped to 4.9%. That\u2019s the highest level since November\u00a02022. Growing questions around the economy […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-52714","post","type-post","status-publish","format-standard","hentry","category-interesting"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/52714"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=52714"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/52714\/revisions"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=52714"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=52714"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=52714"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}