February 28, 2025
Good morning,
S&P 500 Index Futures are indicating a higher opening price for the fourth time in five days, but that’s been a poor guide to how the day eventually pans out, with the index declining between the opening and closing bells in six straight sessions. A correction is officially defined by technicians as a decline in an index of greater than -10% from recent relative highs. The leadership of our bull market is down over 10%; that is enough to say that the market is in correction mode now. The beginning of any correction begs the same question every time: is this just a correction (again, by definition, followed by the resumption of the bull market), or are we beginning something worse (not a correction, but the start of a bear market and much more than 10% declines).
As of last night’s close, the various Indices are off their recent highs by the following:
S&P 500 Index -4.65%
NASDAQ Composite Index -8.20%
Russell 2000 Index -8.05%
MSCI Int’l Developed Market Index -2.05%
MSCI Emerging Market Index -4.25%
Mag 7 Index -14.06%
Russel 1000 Growth Index -7.28%
Russell 1000 Value Index -2.41%
In the past 5 days of correction, sectors have produced the following:
Watching the market decline each day for over a week, with White House uncertainty and market valuations soaring – it’s very easy to say, “Game Over.” However, that is not the market message (yet). The numbers above all point to corrective behavior, not worse. There has been little deterioration in the market signals 5-6 days into this correction thus far. One bullish signal that has developed is the oversold indicator. It has plummeted and sits at its extreme bearish reading – one sign that the correction may not last much longer.
See you Monday, have a great weekend.
Be well,
Mike