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Market Update: 04-16-18

DID STOCKS BOTTOM?

John Lynch Chief Investment Strategist, LPL Financial | Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial

The February 2018 market correction caught many investors off guard, but the longer-term trend remains higher. This year has provided more volatility than we’ve seen in recent years, with many wondering if the movement is a sign that the bull market is ending. Remember that when the market is finding its lowest point (the bottom), the process to get there can be quite frustrating and even confusing for investors. As a result, we acknowledge we are amidst the bottoming process, and we don’t think the bull market is ending, as longer-term technicals continue to look strong, along with sentiment flashing levels of worry seen at other previous major market lows.

TECHNICALS SUGGEST A BOTTOM

Our methodology at LPL Research revolves around three basic tenants: fundamentals, valuations, and technicals. This week we will focus on technicals and show why we believe there may be an above-average chance that stocks have made their lows for 2018. One major trendline we monitor to gauge the health of a bullish trend is the 200-day moving average. This is the average of the closing prices for the previous 200 trading days and is a nice way to assess longer-term trends...

Download the complete PDF with graphs here.

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