Chart of the Week: Similarities in Last Four 10% Market Dips

Chart Similarities in Last Four 10 Market Dips

For years, equity markets have moved higher on very limited volatility. But, as we expected at the beginning of the year, 2018 has proven to be quite the opposite, already with corrections in both February and October. Although hard to remember, the S&P 500 has had four 10% corrections over the last 3+ years. The chart above overlays the last four market corrections over a three-month period, with the most recent decline shown in red. Although the current pullback has not lasted for the full three months yet, the general trends of all four periods look very similar. All of these market pullbacks were driven by concerns over trade, interest rates, and commodity price changes. Market pullbacks such as these can be nerve-racking, but often do not turn into a major bear market. However, it is very important to examine economic data during these market pullbacks to evaluate whether any fundamental economic data is flashing red. We are paying close attention to current market trends and the global economic environment to decipher whether or not a bigger economic and market downturn is on the horizon.