Stock Market Insights: Not an NBA rebound

"God gave you a big butt, so use it!” I was in basketball practice trying to learn how to block out the other team so I could get more rebounds. Good basketball teams excel in putting their body into a position that blocks another player from having a clear lane to the basket and potential rebound. In basketball and the stock market, rebounds are king. Unfortunately, the stock market’s latest rebound has been more junior high than NBA caliber.

This past week we marked the six-month anniversary of the market low (S&P 500) on October 12, 2022. Since that low of negative 25% from the previous high, the S&P 500 has rebounded just over 15%, according to Yahoo Finance. We are happy it is positive, but that type of rebound won’t get the stock market on the cover of Sports Illustrated.

Historically, the market has averaged a rebound of 25% in the six months following a market low. Sadly, this rebound is one of the weakest. Since World War II, there have been 17 market rebounds from bear market lows; of them, this one ranks fourth from the bottom.

What does this mean for stocks in the future? It could be good, or it could be bad. If conditions continue to be good, the market will keep its slow and steady pace and push us into a new bull market. On the other hand, the market could struggle if a deep and long recession drags stocks down below last year’s low. LPL Research thinks the market will continue rebounding. They believe this because inflation is easing, a lower interest rate risk, and a possible mild recession. Either way, something (did someone say Federal Reserve?) put a nasty block out on the market, hurting its early rebound performance. Unfortunately, the weakness of the start of this rebound might keep us from getting the surge we’ve seen in past rebounds. Hopefully, slow and steady wins this race and takes the market to new levels.

I was terrible at basketball; I was the tenth man on JV. I couldn’t shoot and couldn’t jump. Let’s say I had some extra gravitational pull that limited my vertical. But I could block out. I learned to use my posterior to keep the other team from getting rebounds. Right now, marketwise, we need whoever is blocking us out to foul out so we can get some quality rebounds.

Have a blessed week!

www.FerventWM.com