The markets have been all over the place in the past few months.
Most notably, we saw one of the worst weeks for stocks in four years in mid-August when the Down fell 500 points, and all the major indices dropped by at least 3%.
But as crazy as all of this is, the stock market is still basically doing exactly what it always does right now.
In a recent slide deck sent out to clients, Deutsche Bank group chief economist David Folkerts-Landau included a chart, which shows the S&P 500’s current correction-and-recovery episode compared to the historical average.
Interestingly, the S&P is tracking the average gains following prior 10%+ corrections. The two lines even overlap nicely around the 30-days-after-the-trough zone.
So, nothing looks out of the ordinary for now.
However, even though the S&P has been more-or-less following the trajectory of the historical average for now, that does not mean that it will continue to do so in the future…
In any case, check out the chart below.