🟨 SP500 Declines - BEFORE Recession
[bBACKGROUND
In previous idea I showed that it is very significant if we are going to get recession or not.
Link here:
WHAT WE ARE LOOKING AT
In previous idea I showed that it is very significant if we are going to get recession or not.
Link here:
WHAT WE ARE LOOKING AT
- Here we look at what % decline did the SP500 experience BEFORE the start of a recession*.
HOW TO USE IT - We see that the average decline is -6%, HOWEVER we are currently already at -25%.
- This indicates that the current market environment has already discounted quite a lot, even if there is a recession. Remember market is forward looking mechanism. Meaning things might not get VERY ugly even if there is a recession.
- However, in the previous idea we saw that the average decline of a Bear market that coincides with a recession is -34.6%, meaning that ON AVERAGE, EVEN IF we get a Recession we can expect about a 10% decline from the current levels, but a lot has been discounted before the decline.
LEGEND - *Percent decline from SP500 monthly closing cycle high to the month "before" a recession begins.
- 🟥 Red lines indicate the start of a recession.
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