The ongoing correction and deteriorating momentum
The stock market's ongoing correction pushed the S&P 500 into oversold territory (9-day RSI < 30) for the first time since March.
This marks the end of one of the longest, most powerful rallies in history. But as is usually the case, strong momentum that's inevitably followed by a pullback/correction is usually followed by another rally. Hence why when this happened in the past, the S&P usually rallied over the next 3 months:
The % of stocks that are oversold has also ticked up for the first time in months:
Once again, this usually led to more gains for the S&P over the next 3+ months:
It's not just stocks that are falling. Gold, which did well post-lockdown, is on the verge of closing lower this quarter for the first time in 2 years:
When this happened in the past, gold usually rallied over the next year, even if forward returns were very choppy: