Stock Market Insights: Not an NBA rebound

“God gave you a big butt, so use it!”

I was in basketball practice trying to learn how to block out the other team so I could get more rebounds. Good basketball teams excel in putting their body into a position that blocks another player from having a clear lane to the basket and potential rebound.

In basketball and the stock market, rebounds are king. Unfortunately, the stock market’s latest rebound has been more junior high than NBA caliber.

This past week we marked the six-month anniversary of the market low (S&P 500) on October 12, 2022. Since that low of -25% from the previous high, the S&P 500 has rebounded just more than 15%, according to Yahoo Finance. We are happy it is positive, but that type of rebound won’t get the stock market on the cover of Sports Illustrated.

Historically, the market has averaged a rebound of 25% in the six months following a market low. Sadly, this rebound is one of the weakest. Since World War II, there have been 17 market rebounds from bear market lows. Of them, this one ranks fourth from the bottom.

What does this mean for stocks in the future? It could be good, or it could be bad. If conditions continue to be good, the market will keep its slow and steady pace and push us into a new bull market. On the other hand, the market could struggle if a deep and long recession drags stocks down below last year’s low.

LPL Research thinks the market will continue rebounding. They believe this because inflation is easing, a lower interest rate risk and a possible mild recession.

Either way, something (did someone say Federal Reserve?) put a nasty block out on the market, hurting its early rebound performance. Unfortunately, the weakness of the start of this rebound might keep us from getting the surge we’ve seen in past rebounds. Hopefully, slow and steady wins this race and takes the market to new levels.

Mitchell Robinson of the New York Knicks is the king of the block out. According to the NBA, he blocked out more than any other player this season. When he blocks out, he or his team gets the rebound more than 93% of the time. Right now, marketwise, we need whoever is blocking us out to foul out so we can start getting some quality rebounds.

Have a blessed week.

Fervent Wealth Management is a financial management and services entity in Springfield, Mo. Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

Opinions are for general information only and not intended as specific advice or recommendations. All performance cited is historical and is no guarantee of future results. All indices are unmanaged and can’t be invested in directly.

The economic forecast outlined in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

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