The Daily Market Forecast... Bear Market Recoveries

Wednesday’s Results: The buy at 4008.50 stopped out.

Quick Tip: Bear Market Recoveries

The Nasdaq and Russell 2000 indexes are deep in bear market territory, down 30%. The S&P is flirting with a 20% drop this morning (that being the definition of a bear market). You can learn something from recent history. Going back too far, prior to the computer age, will consider human emotions but not the massive technology change, which affects the speed at which price moves.

2000 Bear: Down 50% in 31 months, 60 months to recover.

2008 Bear: Down 57% in 17 months, 49 months to recover.

2020 Bear: Down 35% in 2 months, 5 months to recover.

2022 Bear: Down 20% (so far) in 5 months, recovery unknown.

It’s obvious that the drops and recoveries are happening faster. This is important to know. Planning how to handle the volatility gets a little easier.

If you’re a buy-and-hold investor you’re probably not worried at all. It will come back and most likely quickly given the recent recovery trend.

If you’re a trader you’re either out of your long positions or hedged using put options. The loss is minimal and given the leverage of options maybe profitable overall.

If you’re an active short seller you’re killing it. Hopefully this is making up for all the shorts that didn’t work in 2021. 😊

The point here is to know who you are. What type of investor/trader are you? Are the decisions you’re making getting you a good night’s sleep? Spend some time on this with your trade plan. Update it if need be.

Today’s Best S&P Turning Points:

Sell 3920.75 stop 3926.50.

Buy 3827.25 stop 3823.50.

Trade Fearlessly,

Mike Siewruk

P.S. What’s more important in trading? Math or emotions? Learn how to change your unwanted behavior here.