Stocktake: Arguing against rally is getting pricey

Incredibly the tech-heavy Nasdaq 100 is actually up 8% this year

The S&P 500 is now down less than 6%  in 2020, and has clawed back most of its losses. Photograph: Getty Images

The S&P 500 is now down less than 6% in 2020, and has clawed back most of its losses. Photograph: Getty Images

 

Stock markets keep defying the doubters, with the S&P 500 last week crossing 3,000 for the first time since March and breaking above its 200-day moving average.

The rebound off March’s market lows was initially widely viewed as a bear market rally, but the scale of the recovery suggests otherwise. The S&P 500 is now down less than 6 per cent in 2020 and has clawed back most of its losses. Incredibly, the tech-heavy Nasdaq 100 is actually up 8 per cent this year and within touching distance of all-time highs – some recovery given it had fallen almost 30 per cent.

Not everyone is convinced; JP Morgan last week advised investors not to “overstay their welcome” as the bounce will likely “peter out” in summer.

Maybe, but 90 per cent of S&P 500 stocks were last week trading above their 50-day moving average. The last 11 times that has happened the index was higher a year later on all but one occasion, says LPL Research’s Ryan Detrick, averaging gains of 16 per cent.

Things are also looking up in Europe, notes Baird’s Willie Delwiche, with 87 per cent of stocks trading above their 50-day average.

You might not agree with the market response, but arguing against it is getting pricey.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.