LIVE MARKETS-Corrections happen a lot, bear markets not so much

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CORRECTIONS HAPPEN A LOT, BEAR MARKETS NOT SO MUCH

Last Thursday, the S&P 500 index .SPX confirmed a correction by ending down more than 10% from its February 19 record close.

"Although this hasn’t been fun, we can’t say it wasn’t totally unexpected, as late February to early March is one of the more seasonally weak times of the year, not to mention the first quarter of a post-election year is one of the weakest quarters in the four-year presidential cycle," writes Ryan Detrick, chief market strategist at Carson Group, in a research note out last Friday.

According to Detrick, over the past 46 years this is now the 24th year with at least one correction at some point during the year, meaning "these corrections happen a lot."

However, Detrick notes that not all corrections become bear markets.

"I found 16 years stocks had a correction, but didn’t fall into a bear market that year (which is what we expect to happen this time), and stocks gained a solid 9.5% for the year and were higher for the year 10 times in those cases," he writes.

As for the current decline becoming a bear market, Detrick says anything's possible of course, but as of now he’d put the odds as "quite low."

"First off, we found there have been 48 corrections in history and only 12 of them turned into a bear market, so only 25% have gone on to move into bear market territory," Detrick says.

Secondly, he says that if this turned into another bear market it would set a new record in that the S&P 500 peaked on February 19, 2020 before the Covid bear market and then there was another bear market in 2022.

"We’ve never seen back-to-back bears so close (only 1.9 years apart), so could we really have a third bear so soon? If we did that would be three bear markets starting within five years of each other, breaking the previous record of nearly seven years between 1966 and 1973. Again, anything is possible, but I’d say another bear this soon after the previous two isn’t a likely scenario."

(Terence Gabriel)

FOR MONDAY'S EARLIER LIVE MARKETS POSTS:

GLOOMY MONDAY: RETAIL SALES, NAHB, EMPIRE STATE - CLICK HERE

RBC CUTS S&P 500 YEAR-END TARGET TO 6,200 - CLICK HERE

WALL STREET TRIES TO LOOK ON THE BRIGHT SIDE OF ECONOMIC DATA - CLICK HERE

S&P 500 INDEX: MIGHT THE SEASONAL CHANGE SPARK A FRESH START? - CLICK HERE

ESG’S DEFENCE DILEMMA - CLICK HERE

JPM UPGRADES "ACCIDENTAL BENEFICIARY" EM STOCKS - CLICK HERE

WALL STREET: A 'TRADABLE RALLY' IS IN THE AIR - CLICK HERE

STOCKS TICK HIGHER AS OIL PROVIDES LIFT, RETAILERS DRAG - CLICK HERE

EUROPE BEFORE THE BELL: TRADERS MULL POSITIVE CHINA SIGNALS, GEOPOLITICS - CLICK HERE

EUROPE, CHINA SHINE AS US EXCEPTIONALISM FADES - CLICK HERE