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Don’t Panic! What History Tells Us After 7 S&P 500 Losing Weeks

The S&P 500 has fallen for seven straight weeks. Here’s why you don’t want to panic now.

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The S&P 500 has fallen for seven straight weeks. Here's why you don't want to panic now.

It has been a rough ride for investors. In fact, the S&P 500 has declined every week for almost two months straight, and the other indices haven’t fared much better. The Nasdaq is also down in seven straight weeks, while the Dow is down for eight.

It’s not very often we get a stretch this bad.

There tend to be opportunities to sell into a rally. We got one in mid-March, but it’s been all downhill since then.

At this writing, the S&P 500 is up 2.4% on the week, but I’m not sure many investors consider it out of the woods at this point.

The Data

Seven straight weekly declines is a pretty rare occurrence. This is just the fourth time we’ve seen such a streak since 1928. The prior three scenarios occurred in 1970, 1980 and 2001. Interestingly, all four declines concluded either in March or May. 

To little surprise, there is good news and bad news associated with the declines.

The bad news: In two of the three declines, the seven straight weeks of declines turned into eight straight weeks of declines (in 1970 and 2001).

Further, in both of those years, the market went on to retest the lows, although the time it took varied widely. After the bottom in 1970, the S&P 500 went on to break the low about 4 1/2 years later, in Q4 1974. In 2001, the index broke to new lows a little more than six months later following the 9/11 attacks. 

The good news: Each downtrend of this magnitude (seven straight weeks or more) has marked the low for at least six months. Further, the longest stretch did not exceed eight straight weeks. 

The “tldr” is we may endure more short-term pain, but we also could be near an intermediate or potentially even a long-term bottom.

For instance, following the low after each stretch of seven or more consecutive weekly declines, the S&P 500 was higher four weeks later, one quarter later, six months later and one year later. That’s promising.

In 2001 we had a nice initial burst off the lows, climbing 15.4% a month later and 13.3% one quarter later, although those gains faded a bit once we got to the 6-month and 12-month marks.

In the other two instances, the gains were much stronger, particularly one year down the road.

What to Do Now?

It must be said as caution that not all these scenarios are alike. That’s particularly true in a span of five decades and when we’ve had only three other occurrences to compare with over the past 50 to 60 years.

We could decline 10 straight weeks or rally this week and decline for another seven weeks in a row. (I’m not saying it’s likely, only that it’s possible.)

At this very moment, we have inflation that may or may not have peaked, a wavering housing market, war in Eastern Europe and a hawkish Federal Reserve. Take out the inflation aspect of this and the Fed would likely be dovish, not hawkish and tightening rates.

Selling after such an egregious decline — the S&P 500 and Nasdaq are 18.2% and 30.3% off the highs, respectively — seems like a mistake at this point.

For some perspective, the Nasdaq fell 32.6% at the depths of the covid-19 pullback. Its peak-to-trough decline is currently 31.9%.

While it’s human nature to “protect what’s left,” it’s also in investors' interest not to be in the group that sells into the low during a marketwide capitulation. I’m not saying it’s easy, but investors should keep their wits about them, even when their emotions are running high.

That’s especially true when history, however limited, tells us that we are usually near an intermediate or long-term low after such a misery-filled stretch of trading. 

Trading the S&P 500

Weekly chart of the S&P 500.

Chart courtesy of TrendSpider.com

As we look at the chart, the S&P 500 clearly is trying to find its footing in the 3,800s. That’s as it has traded below 3,900 in each of the past three weeks but continues to bounce.

If the index can clear 4,000 and then 4,150, there’s a realistic shot at a bounce into the 4,220 to 4,320 area. That’s admittedly a wide range, but with volatility this sharp, it’s easy for assets to overshoot key levels — both on the upside and on the downside.

If this is not the low and we trade below 3,795 — be it next month or in several months — then we have to consider the possibility that 3,400 to 3,500 is in play. There, we will find a bevy of levels that should support the S&P 500.

While it’s hard to be truly optimistic at the moment, it’s not irrational to be on the lookout for some type of rebound. 

The question isn’t “whether” a relief rally will come. It’s “how long will it last and how far will it go?” 

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Economics

Expert on Bath & Body Works: ‘an easy double the next three years’

Bath & Body Works Inc (NYSE: BBWI) might have been painful for the shareholders this year, but the road ahead will likely be a rewarding one, says…

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Bath & Body Works Inc (NYSE: BBWI) might have been painful for the shareholders this year, but the road ahead will likely be a rewarding one, says the Senior Vice President and Portfolio Manager at Westwood Group.

BBWI separated from Victoria’s Secret

The retail chain separated from Victoria’s Secret in 2021, which, as per Lauren Hill, clears the way for a 100% increase in the stock price in the coming years. On CNBC’s “Closing Bell: Overtime”, she said:

[Bath & Body Works] has really strong pricing power. They have 85% of their supply chain in the United States and with the Victoria’s Secret brand now gone, I think it’s a wonderful buy; an easy double the next three years.

Last month, the Columbus-headquartered company reported results for its fiscal first quarter that topped Wall Street expectations.

Bath & Body Works is a reopening play

The stock currently trades at a PE multiple of 6.64. Hill is convinced Bath & Body works is a reopening name and will perform so much better as the world continues to pull out of the pandemic. She noted:

Customers have missed buying their scented products in store and as their social occasion calendars fill up, they are getting back out there and buying more gifts, including Bath & Body Works products.

Hill also dubbed BBWI a great pick amidst the ongoing inflationary pressures because of its reasonably priced products. Shares are down more than 50% versus the start of 2022.

The post Expert on Bath & Body Works: ‘an easy double the next three years’ appeared first on Invezz.

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Economics

Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Authored by Naveen Anthrapully via The Epoch Times,

A…

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Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Authored by Naveen Anthrapully via The Epoch Times,

A majority of C-suite executives are considering leaving their jobs, according to a Deloitte survey of 2,100 employees and C-level executives from the United States, Canada, the UK, and Australia.

Almost 70 percent of executives admitted that they are seriously thinking of quitting their jobs for a better opportunity that supports their well-being, according to the survey report published on June 22. Over three-quarters of executives said that the COVID-19 pandemic had negatively affected their well-being.

Roughly one in three employees and C-suite executives admitted to constantly struggling with poor mental health and fatigue. While 41 percent of executives “always” or “often” felt stressed, 40 percent were overwhelmed, 36 percent were exhausted, 30 percent felt lonely, and 26 percent were depressed.

“Most employees (83 percent) and executives (74 percent) say they’re facing obstacles when it comes to achieving their well-being goals—and these are largely tied to their job,” the report says. “In fact, the top two hurdles that people cited were a heavy workload or stressful job (30 percent), and not having enough time because of long work hours (27 percent).”

While 70 percent of C-suite execs admitted to considering quitting, this number was at only 57 percent among other employees. The report speculated that a reason for such a wide gap might be the fact that top-level executives are often in a “stronger financial position,” due to which they can afford to seek new career opportunities.

Interestingly, while only 56 percent of employees think their company executives care about their well-being, a much higher 91 percent of C-suite administrators were of the opinion that their employees believe their leaders took care of them. The report called this a “notable gap.”

Resignation Rates

The Deloitte report comes amid a debate about resignation rates in the U.S. workforce. Over 4.4 million Americans quit their jobs in April, with job openings hitting 11.9 million, according to the U.S. Department of Labor. In the period from January 2021 to February 2022, almost 57 million Americans left their jobs.

Though some are terming it the “Great Resignation,” giving it a negative connotation, the implication is not entirely true since most of those who quit jobs did so for other opportunities. In the same 14 months, almost 89 million people were hired. There are almost two jobs open for every unemployed person in the United States, according to MarketWatch.

In an Economic Letter from the Federal Reserve Bank of San Francisco published in April, economics professor Bart Hobijn points out that high waves of resignations were common during rapid economic recoveries in the postwar period prior to 2000.

“The quits waves in manufacturing in 1948, 1951, 1953, 1966, 1969, and 1973 are of the same order of magnitude as the current wave,” he wrote. “All of these waves coincide with periods when payroll employment grew very fast, both in the manufacturing sector and the total nonfarm sector.”

Tyler Durden Sat, 06/25/2022 - 20:30

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Spread & Containment

Optimism Slowly Returns To The Tourism Sector

Optimism Slowly Returns To The Tourism Sector

Coming off the worst year in tourism history, 2021 wasn’t much of an improvement, as travel…

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Optimism Slowly Returns To The Tourism Sector

Coming off the worst year in tourism history, 2021 wasn't much of an improvement, as travel remained subdued in the face of the persistent threat posed by Covid-19.

According to the United Nations World Tourism Organization (UNWTO), export revenues from tourism (including passenger transport receipts) remained more than $1 trillion below pre-pandemic levels in 2021, marking the second trillion-dollar loss for the tourism industry in as many years.

As Statista's Felix Richter details below, while the brief rebound in the summer months of 2020 had fueled hopes of a quick recovery for the tourism sector, those hopes were dashed with each subsequent wave of the pandemic.

And despite a record-breaking global vaccine rollout, travel experts struggled to stay optimistic in 2021, as governments kept many restrictions in place in their effort to curb the spread of new, potentially more dangerous variants of the coronavirus.

Halfway through 2022, optimism has returned to the industry, however, as travel demand is ticking up in many regions.

You will find more infographics at Statista

According to UNWTO's latest Tourism Barometer, industry experts are now considerably more confident than they were at the beginning of the year, with 48 percent of expert panel participants expecting a full recovery of the tourism sector in 2023, up from just 32 percent in January. 44 percent of surveyed industry insiders still think it'll take until 2024 or longer for tourism to return to pre-pandemic levels, another notable improvement from 64 percent in January.

Tyler Durden Sat, 06/25/2022 - 21:00

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