We expected consolidation in the market, and boy did we get it very quickly. After yesterday’s 5.89% plunge in the S&P 500 (SPX), only 2% of SPX are trading above their respective 10-day moving averages and 98% of volume on the NYSE was downside volume. While volatility can continue near-term as we go through this consolidation process, both readings are historically extreme suggesting the majority of weakness should be already in the market.
Please refer to macro post yesterday highlighting why we want to use weakness as an opportunity to add exposure as the current expected consolidation period plays itself out. We would highlight three key points from the post:
- We have a super easy Fed
- Closer proximity to vaccine based on multiple companies accelerating human trials
- The domestic and global economy are showing signs of inflecting off the low
Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expenses. All data points are sourced from Bloomberg as of 6/12/20 unless noted otherwise.
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