Stock investors may want to brace for some bumps in the road.
After months of gains and low volatility from stocks, emerging signs show that supportive equity trends are taking a pause, and the market could experience some chop in the coming weeks.
This week, for example, the S&P 500 closed at its lowest level since July 11 and dipped below its 50-day moving average1 (a gauge of market momentum) for the first time since late March, as shown in the chart below.
It’s not uncommon for stocks to suffer a late-summer slump. According to Dow Jones data, September has historically been the worst month for S&P 500 performance. Although numerous other factors remain supportive of stocks, don’t be surprised if there are further pullbacks before the market regains its upward momentum.
1 The S&P 500® 50-day moving average is the average price over the past ten trading weeks.
2 The S&P 500® Low Volatility Daily Risk Control 10% Index represents a portfolio of the S&P 500 Low Volatility Index plus an interest accruing cash component. The index is dynamically rebalanced to target a 10% level of volatility. Volatility is calculated as a function of historical returns.
This commentary is written by Horizon Investments’ asset management team.
Past performance is not indicative of future results.
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