The Cause Of Every Stock Market Sell-Off Since The Bull Market Began In March 2009

Desjardins strategist Ed Sollbach put together an informative table showing every correction of 3.8% or more on the S&P 500 since the stock market rally began in March 2009.

In a note to clients Tuesday, Sollbach wrote:

The S&P 500 is in the midst of its 12th correction of 3.8% or more since March 2009, and the first 11 were buying opportunities. The S&P 500 has corrected 5.8% over the last 33 days, compared with the average correction of 8.7% over 42 days. Certainly the spike in the VIX to 20.5 and the 4.2% correction in commodity prices suggest the correction is almost over.

However, this is only the second correction associated with rising bond yields. After a 91bps spike since only May 2, we would like to see bond yields roll over, reducing the pressure on the all‐important recovery in US housing and consumer spending. During the previous 11 corrections, bond yields eventually plunged with equities, so we would look at the beaten‐down interest sensitives at this point.

(Yesterday, the S&P 500 closed up 1.0%, and this morning, futures are up another 0.5%.)

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