Weekly Market Update - May 15

By Ryan Gilmer, CFA, CMT Chief Investment Officer

May 15, 2020

We hope this finds you well, and exploring more outside your home, or at least the sunny outdoors. This week, the S&P 500 declined, and bigger picture: has continued to move sideways over the trailing month, from the middle of April until now.

In our April 17th market update, we included a chart from Strategas Research showing the best 15 trading-day return periods on the S&P 500. We have updated that chart to include the current market information. As of April 14, 2020 (15 days after the market low), the S&P 500 showed a 27.2% increase: the best ever.

In the 20 trading days between April 14th and Tuesday, May 12th, the S&P increased 0.85%. As you can see from the +20 Days column, this return was in the middle of the range of historical returns for similar periods.

What can we infer from the information on this chart and how does it affect your investments?

Based on historical periods similar to the current market, it would be normal for stocks to continue to be flat or down over the next 45-day trading period, given the size of the rally we saw from March 24 – April 14.

While predicting the future is impossible, we can gain insight from historical periods. We don’t know for sure what will happen next, but it makes sense for us to consider all the possibilities, as well as what we may do as the future unfolds. If the market does experience negative returns over the next few months, this chart shows that it will probably be an attractive buying opportunity for longer-term investors, for both the likelihood of positive returns and the size of those returns. In other words, if the market dips in the next few weeks, we may be encouraging clients to invest additional cash on hand.

Please reach out to me if you would like to discuss this further.

Keywords: covid19
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