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 Dow Jones

 32237.53

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 S&P 500

 3970.99

+22.27  (+0.56%)

  
 
  

 Nasdaq

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 Russell 2000

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 VIX

 21.90

-0.71  (-3.14%)

 

 Dow Jones

 32237.53

+132.28  (+0.41%)

  
 
  

 S&P 500

 3970.99

+22.27  (+0.56%)

  
 
  

 Nasdaq

 11823.96

+36.56  (+0.31%)

  
 
  

 Russell 2000

 1729.44

+9.15  (+0.53%)

  
 
  

 VIX

 21.90

-0.71  (-3.14%)

 
 
 
Trading Strategies
»
Research
 

What To Expect After An Drop Of 20% In The Stock Market?

 
 
 
 

History shows that the stock markets will recover at one point or another, but this is not clear due to research that it takes about 3 years on average

 

If there is anything to pin hopes on, it is that the stock market in the long term tends to recover nicely and return to and even exceed the previous record level. The S&P 500 recovered within three years in eight of the nine times the index fell 20% or more.

 

It can be seen that most of the shares also returned sharply after a drop of 20% or more from a peak. The S&P 500 has risen an average of 15% the seven times stocks have fallen 20% or more from a record high.

 

As inflation increased and the Federal Reserve focused on raising interest rates, investors acted rapidly to revalue stocks this year. This is the worst start for the Nasdaq, S&P 500, and Dow Jones indexes in decades.

 

Almost no sector of the market was able to avoid the declines in the stock market. Growth stocks like Amazon, Tesla, and Netflix are all down more than 30% so far in 2022. Overall, they all continue to track the expected recession in the coming year.

 

It's actually a very difficult time to think very long term," said Kate Moore, Blackrock's head of global allocation. "We know there are a huge number of cross currents in the market right now. It's not just monetary policy and inflation resistance, but also kind of what's happening geopolitically.

 

The Atlanta Fed GDPNow model now projects a 2.1% decline in economic output in the second quarter, which would meet the unofficial threshold for a recession compared to a 1.6% decline in the first quarter.

 
 
     
 
 
#

Nama Cohen

Senior Advisor Corporate Finance and Global-macro research with over 20 years of experience as a buy-side trader

 
 

Disclaimer: The article does not constitute investment advice or marketing that takes into account the data and the special needs of each person.

 

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Disclaimer: The Score performance whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The Readiness Indicators, Sentiment Indicators and total score are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. Active trading is generally not appropriate for someone of limited resources, limited invesment or trading experience, or low-risk tolerance. Your capital may be at risk.

Please note that no offer or solicitation to buy or sell securities, securities derivatives of future products of any kind, or any type of trading or invesment advise, recommendation or strategy, is made, given or endorsed by TrendSpott including any of their affiliates ("TS").

This information is provided for illustrative purposes only. You should not rely on any advice and/or information contained in this website and before making any investment decision. we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

 
 
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Disclaimer: The Score performance whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The Readiness Indicators, Sentiment Indicators and total score are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. Active trading is generally not appropriate for someone of limited resources, limited invesment or trading experience, or low-risk tolerance. Your capital may be at risk.

Please note that no offer or solicitation to buy or sell securities, securities derivatives of future products of any kind, or any type of trading or invesment advise, recommendation or strategy, is made, given or endorsed by TrendSpott including any of their affiliates ("TS").

This information is provided for illustrative purposes only. You should not rely on any advice and/or information contained in this website and before making any investment decision. we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.