🟨 SP500 Declines - BEFORE Recession

2022年12月12日

[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

• 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.