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The Bottoming Process

Marco Fragnito | Robert R. Fragnito

This is an excerpt from our June Monthly Market Commentary, published on June 22, 2022. Key Topics: The Federal Reserve, The Nature of Bear Markets since 1929, and Market Outlook.

Equity markets are in a bear market. At present only the Dow Jones Industrial Average is failing to meet the technical definition of a bear market which is a 20% decline from all-time high, yet it may come soon enough. History says it’s likely to get worse before it gets better, and while it may be difficult to be positive, the bottoming process has already begun in certain sectors of the market.

Since 1929, the S&P has experienced more than two dozen bear markets. This year’s decline into bear market territory has been quicker-than-average, numbering at 111 trading days according to Dow Jones Market Data. Over the last 40 years, only three other bear markets reached a 20% drop within fewer trading days, these were the bear markets of 1987, 2009 and 2020 (see chart below).


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