In the approaching November, a 'panic spike' may occur amidst uncertainty. While some engage in 'panic selling' during sharp declines, a 'panic spike' phenomenon emerges as others overbuy stocks out of FOMO. S&P 500 index nears its 200-day moving average and the critical psychological support level of 4,200, suggesting a possible turnaround from recent declines. This is backed by the flow of volatility indices. As S&P 500 approaches its support level, VIX 3-month volatility index may signal oversold conditions, presenting a buying opportunity for investors. VIX3M measures market expectations for volatility over the next 3 months, while VIX gauges it for the next 30 days. However, S&P500 may not find its bottom until the US dollar and 10-year Treasury yields reach their peaks. It faces further downside risks, and though a 'panic rally' might occur in early November, S&P500 could see more significant declines in the longer term. #BofAMerrillLynchInvestmentNote
Even with the prolonged predictions of a US economic downturn for over a year, it has not yet arrived, and even if a recession does occur, investors need not be anxious (BofA). Historically, economic recessions tend not to last long, making it a favorable buying opportunity for stock investors. Since World War II, economic downturns have typically lasted an average of 10 months. Following this, the S&P 500 index rebounded with robust returns within a few months. In the 12 recessions since 1945, the S&P 500 index often started to recover from its lows even while the economy was technically in a recession. After hitting those lows, the index had an average 3-month return of 19.7%, a 6-month average of 28%, and a 12-month average of 43.7%. The S&P 500 index typically reaches its peak about 13 months before a recession begins and hits its bottom not long before the recession ends. Recessions often act as reset periods, with the economy becoming stronger afterward. Histori...
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