S&P 500 Nearing a Bear Market 

Tom Gentile

Posted in
Big Picture

By: Tom Gentile
May 19th, 2022

2 mins read

A bear market is defined as a 20% drop from an index’s 52-week high.

The S&P500 has become more of the benchmark traders and investors use to assess what is going on with stocks / the economy

It used to be the Dow Jones Industrial Average, but nowadays more and more professionals get more out of what the S&P is doing as that index is comprised of 500 stocks, which is a wider, more diverse grouping of stocks than the Dow.

The feeling is analyzing the S&P 500, which has many more stocks in it, is a better way to get a grasp of what’s going on with the economy than the deemed narrow index that is the Dow.

Where is the S&P 500 Now

I looked at my online options analysis software, www.tomsoptiontools.com, to take a look at the S&P 500 current price to its 52-week high closing price.

Here is the data:

The high price on the S&P 500 52- week High is shown as 4796.56 and the close price is shown as 3900.79.

The differential is 895.77.

Divide the High price by the differential of 895.77 and the result is a decline of 18.675%. That is showing the S%P is less than a 2% drop in price to be classified as it being in a Bear Market.

That doesn’t mean we should expect the 20% decline becoming the line in the sand support for the S&P 500 and to see it bounce and fully recover.

It just means people can now label it as a Bear Market, and you know the financial news networks will be all over it and bringing this to everyone’s attention.

What that means to me is I keep looking at more bearish opportunities than bullish.

My tools show options activity based on cheap, expensive, unusually high Put option volume and the like to find the stocks and or ETF’s that may trade even lower and the options activity on those by other traders.

As for long-term investments, I yield to your financial professionals/ brokers to work with you on allocation of funds, whether you go more to cash, rotate into other asset classes or cost average existing holdings and the like.

App: Toms Option Tools

Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.

Other times I will have other charts may work to amplify my educational points. 

Those options data lists, however, can be found on my app Tom’s Option Tools. Use your device to search up and download this app and get free access to the Morning Reports section of the app.

Other parts of the app are available at a premium subscription rate, but the Morning Reports Lists are yours free.