Correction Spelled with a “W”

Brian Cochran

Mark Twain is credited with saying that “History does not repeat itself, but it often rhymes.” Market history is no exception. Stock markets are extremely unpredictable in short periods but we can draw clues and patterns from the past.

Stock market corrections (like the one we have been experiencing over the last several weeks) seem to rhyme. Corrections often form a “W” shape as markets drop quickly, briefly move higher, test the recent lows and then recover.

December 2015‐April 2016

Yahoo finance chart, December 2015‐April 2016

August‐November 2015
Yahoo finance chart, August‐November 2015
July‐October 2011
Yahoo finance chart, July‐October 2011
September 2018 through today (11/20/2018)
Yahoo finance chart, September 2018 through 11/20/2018

 

We appear to be in the phase of testing recent lows. Time will tell whether this is another “W”, or something more. In the meantime, we encourage you to limit your news consumption, stick to your investment process and call us if we can help.