Deceptive Calm of the Stock Market

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S&P 500: Down 0.70% for the Day, Up 0.06% for the Week

By Doug Short, Advisor Perspectives:

When the US markets opened, European indexes were in the dumps on renewed anxieties over a Greek default. The S&P 500 plunged at the open and hit its -0.83% intraday low 90 minutes later. Sideways trading during the afternoon led to a -0.70% loss for the day. For the week the index was essentially flat, up a tiny 0.06%.

The yield on the benchmark 10-year note closed unchanged at 2.39%.

Here is a 15-minute chart of the past five sessions.

Here is a weekly snapshot of the index. Volume was unremarkable.

A Perspective on Drawdowns

Here’s a snapshot of selloffs since the 2009 trough.

S&P 500 Drawdowns

For a longer-term perspective, here is a charts base on daily closes since the all-time high prior to the Great Recession.

S&P 500 Snapshot

By Doug Short, Advisor Perspectives

“Last week, I had a fascinating conversation with Neile Wolfe, of Wells Fargo Advisors, LLC., about high equity valuations and what happens when they collide with a recession,” wrote Doug Short. And here’s what happens: A crash. That’s what highly valued stock markets do in a recession. Read…  What to Expect When This Stock Market Meets a Recession

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