The S&P 500 is getting very close to bear market territory. Analysts label it a bear market if the S&P 500 drops by 20% plus, observes Dan Sullivan, relative strength specialist and editor of The Chartist.
We think it should be 19% because there have been no less than four selloffs since 1990 that had ended at this level. The last one was as recent as 2018 when the S&P 500 dropped 19% between September and October of that year.
Since 1946 there have been sixteen bear markets ranging between -19.4% and -56.8%. The four most notable bear markets were: November 1968 — May 1970 -36.1%; January 1973 — October 1974 -48.2%; March 2000 — October 2002 -49.1%; and October 2007 — March 2009 -56.8%.
We cannot rule out a rerun of any of these four scenarios at the present time. We also cannot rule out the fact that we could be very close to an effective bottom based on the incredible dismal sentiment combined with the extreme oversold readings.
At last glance, only 22% of NYSE stocks were above their 200-day moving averages and only 15% had managed to stay above their 50-day lines. The carnage has been worldwide with the Dow Jones Global Index losing 30% since topping out last November.
The latest from Investors Intelligence now shows more bulls throwing in the towel with only 27.6% of advisors in the bullish camp. This is the lowest percentage since 2016 and is bullish from a contrary opinion standpoint. The current lack of bulls has often represented excellent buying opportunities in the past.
Meanwhile, here's a look at 3 stocks that have been added to our relative strength ratings:
Williams Companies (WMB) is an energy company. The company’s segments include Transmission & Gulf of Mexico, Northeast G&P, West, and Gas & NGL Marketing Services.
Transmission & Gulf of Mexico segment comprised of its interstate natural gas pipelines, Transco and Northwest Pipeline, as well as natural gas gathering and processing and crude oil production handling and transportation assets in the Gulf Coast region.
Chevron Corp. (CVX) manages its investments in subsidiaries and affiliates, and provides administrative, financial, management and technology support to the United States and international subsidiaries that engage in integrated energy and chemicals operations. The Company operates through two business segments: Upstream and Downstream.
Teck Resources Ltd. (TECK) is a Canada-based mining company. The company’s segments include steelmaking coal, copper, zinc and energy. It owns or has interests in approximately 10 operating mines, a metallurgical complex, and several major development projects in the Americas.
Its projects include Fording River Extension Project, HVC 2040 Project, Galore Creek Project, Quintette Project, Quebrada Blanca Phase 2 Project, Relincho and El Morro Projects and others.
