Looking for a market bottom? The S&P 500 is on track to record its fourth consecutive down-day on Friday, and the damage is adding up: Since its recent high in mid-September, the benchmark U.S. index has tumbled close to 8 per cent.
According to Bespoke Investment Group , the S&P 500 has suffered 17 pullbacks of 5 per cent or more during the current bull market, which began in March 2009. On average, declines have lasted 22 days, inflicted 8.3 per cent in damage. Each dip has been followed by an impressive rebound, which is why the index was near a five-year high before the most recent setback.
Michael Hartnett, chief investment strategist at Bank of America, has a few tips for timing a rebound: Expect more downside to global equities in the near term, but watch U.S. technology stocks – which have been among the leaders of the current selloff – for a sign that the market low has been reached.
“Positive market price action following negative economic data in coming weeks would also signal to us that trading positions have once again switched from bullish to bearish,” he said in a note.
About tech stocks: In mid-morning trading on Friday, the S&P 500 had fallen 7.8 per cent since Sept. 14, but tech stocks have done far worse than the overall market, tumbling 13.7 per cent – or more than 3 percentage points worse than energy stocks and four percentage points worse than materials.
Apple Inc. can take a lot of the blame here: The tech behemoth has fallen close to 27 per cent from its record high in September, marking its most severe setback since the financial crisis. But it is not alone: Microsoft Corp. has fallen nearly 15 per cent, Intel Corp. has fallen about 13 per cent and Hewlett-Packard Co. has fallen about 30 per cent.