But the market is due for a bounce, according to the WOLF STREET dictum that “Nothing Goes to Heck in a Straight Line.”
By Wolf Richter for WOLF STREET.
Monday would be a good start for a bounce. It could also start on Tuesday or in November or whenever. And maybe not much of a bounce. But the market is due for a bounce after what it has been through in September, or actually since August 16, which was the end of the bear-market rally.
The unsightly demise of this bear-market rally is adding to the spooky parallels to the dotcom bust, which was also interrupted by a rally in the summer of 2000, when the Nasdaq Composite rallied 33% without getting back to its previous high, and then ultimately collapsed by 78%, from which it wouldn’t fully recover until 15 years later, in July 2015, after the Fed had thrown trillions of dollars at the market with QE. But back then, inflation was well below the Fed’s target. Now inflation is raging well above the Fed’s target.
So since the end of this summer’s bear-market rally on August 16, the S&P 500 Index has dropped 16.7% and the Nasdaq has dropped 19.5%, both of them just barely above the February 2020 levels.