Finally, coming into this year, we stated, “Following last year’s unprecedented streak without any meaningful corrections and the lack of volatility, we expect to see an upturn in volatility and a return of more normal market corrections. Since we don’t see a recession on the horizon, any correction should be shorter and shallower and set the market up for additional gains.” The fundamental backdrop remains solid with the synchronized global economic expansion intact, the Conference Board’s Leading Indicators Index at a new high, and jobless claims at their lowest levels since 1969! The correction in stocks has caused investor sentiment to sour to the point of pessimistic extremes and on the valuation front, the S&P 500 forward P/E ratio sits at 15.9, a level not seen since the Brexit event in 2016.
Related: As Trade Tensions Linger, China ETFs Remain Hot
Given our expectation that a full blown trade war will be avoided and solid economic and earnings growth and attractive valuations and sentiment levels, we continue to believe the recent volatility is a trading correction within an ongoing bull market.
K. Sean Clark is the Chief Investment Officer at Clark Capital Management, which is a participant in the ETF Strategist Channel
Disclosures
Clark Capital Management Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Clark Capital’s advisory services can be found in its Form ADV which is available upon request.
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