The S&P 500 Index fell 1.48% yesterday...and in the 21st century, there have only been three other years where the first day of trading gave us a decline of more than 1%. Those years were 2001, 2008, 2015. The average return in those previous three years for the S&P 500 index was a loss of 17.42%. 2008 gave us a loss of 38.5%, 2001 saw a loss of 13%, and in 2015 the SPX fell 0.73%. Therefore, the best we can hope for in 2021 is a flat stock market...and the odds that the market will end the year in bear market territory are quite high.
Of course, that last statement is utterly ridiculous, but since January is such a big month for market trivia, we thought we’d have some fun by highlighting a little trivia ourselves..........We will also highlight that 2008 was that last year that Tom Brady did not play for the Patriots (due to an injury). A coincidence? We think not.
Seriously though, yesterday was a rough day for the stock market, but we are a long way from raising a big yellow warning flag on the market. Volume was quite strong...with the composite volume at almost 3.5bn shares. That was much higher than any trading day in January of 2020...except for the last day of the month. We’d also note that breadth was pretty negative...at more than 5 to 1 negative for the S&P 500. Having said this, the S&P was able to retrace 40% of its midday losses by the close. Also, the breadth at the midday lows was more than 10 to 1 negative, so it improved very nicely in the afternoon.
In other words, there were certainly a few things to be concerned about in terms of yesterday’s action, but we’re going to ...