Stocks took a beating late last year, with key market indexes putting in their 2018 lows the day before Christmas (WSJ, various sources). For daily-market watchers – something that’s not recommended for longer-term investors – volatility and quick shifts in sentiment can be maddening. Besides, over a shorter period, markets can overshoot and can undershoot.
Last year’s stock market selloff was blamed on several factors. Among the concerns – fears the Federal Reserve’s desire to gradually raise interest rates might harm the economy, and the uncertain path U.S./China trade relations might take.
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The S&P 500 Index1 is up 13.6% since its most recent bottom on Christmas Eve. Year-to-date (thru 1.21.19), the index is up an impressive 6.5% (MarketWatch).
We can credit some of the performance to oversold conditions in late December. When short-term negativity is at extreme levels, upbeat news is likely to spark a move into stocks.