Market Outlook · June 10, 2020

Historic Momentum, Overbought Market Conditions, and What a Recession May Mean for November

Brent Ciliano

CFA | SVP, Chief Investment Officer

1 Strongest market momentum in decades

The S&P 500 has been demonstrating the strongest market momentum in decades-what has that historically portended?

2 The market is consolidating the most overbought condition in 30 years

Overbought is a misused term in the investment world, often associated with the conditions present before a big decline–but the statistical reality is quite different. Extreme overbought conditions are typically only found with the most potent rallies off major market lows.

3 FANG stocks have masked the reality of markets

While many of the offensive corners of the market paused on June 9th, the defensive outlets (e.g., Consumer Staples) did not offer any relative advantage.

4 The National Bureau of Economic Research (NBER) officially declares a US recession started in February

On Monday June 8th, the NBER officially determined that the US economy entered a recession in February. While this is a backward indicator and the equity market is looking through the recession, historically recessions have led to incumbent presidents losing re-election.

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