Bear Market In Stocks; Small-Cap Stumbles

  • Jason Goepfert

    Jason Goepfert

    Published: 2018-11-12 at 11:54:39 CDT

This is an abridged version of our Daily Report.

A bear market in stocks

While the major indexes are far from a 20% decline, many S&P 500 components have declined more. At the depths of the decline in October, more than 40% of the S&P reached bear market territory.

That often served as a low point historically, but with false signals in 2001 and 2008. The biggest problem was multiple false signals in 2001, when there was a spike of more than 40% of companies falling into bear markets, then a recovery back below 30%. Soon after that, though, the S&P topped out and headed to new lows.

The only way to avoid those was to wait for an even more stringent recovery. Waiting until fewer than 15% of stocks were in a bear market was helpful.

Small-cap stumbles

One of the longest streaks in the history of the Russell 2000 is on the verge of ending. Its 50-day average is close to cross below its 200-day for the first time in more than 600 sessions.

The ends of other long streaks preceded some tough markets, especially shorter-term.

The latest Commitments of Traders report was released, covering positions through Tuesday

The 3-Year Min/Max Screen shows that “smart money” hedgers added to their already-extreme long position in orange juice but there were no new extremes of note.

Soaring Staples

The 10-day Optimism Index of the Consumer Staples XLP fund is at 77. There have been 34 days in its history with this high of a reading.

The post titled Bear Market In Stocks; Small-Cap Stumbles was originally published as on on 2018-11-12.

At, our service is not focused on market timing per se, but rather risk management. That may be a distinction without a difference, but it's how we approach the markets. We study signs that suggest it is time to raise or lower market exposure as a function of risk relative to probable reward. It is all about risk-adjusted expectations given existing evidence. Learn more about our service , research, models and indicators.

Follow us on Twitter for up to the minute analysis of market action.

Not ready to signup up for a free trial yet?

Signup for our Daily Lite email to receive highlights of our daily report, research and studies.

RSS Feed

Subscribe to the Blog RSS feed

Recent Blog Posts

As mentioned in...

Brought to you by:

Sundial Capital Research Logo