Even today, the stock continue to drop, but the current market situation is very different, compared to previous days of declines. Why? Simply, because the indices remain below 200 SMA and modified BAML volatility index has reached even higher than the levels from dot.com bubble.
What say the statistics for the days after such index spikes?
BAML's strategies conclude that from the current levels, the SP500 returns an average of 6.5% over the next three months, and up to 6 months we can expect a decline of 16%.
What can we expect in the coming months?
This correction is most likely a new trend trend. I expect ongoing sales to achieve greater percentages for several reasons. The fact is that the market has been overpriced, more than ever, and similar end-of-cycle increases anticipate deeper adjustments. In addition, the trade war between the US and China appears to be just beginning. As a result, growth in bond yields is not excluded.
Source: Bloomberg Pro Terminal
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