What to do After the Markets Suffer the Worst First Half Performance in 50 Years

Tom Gentile

Posted in
Big Picture

By: Tom Gentile
June 30th, 2022

2 mins read

Regardless of where equities close out today, it will put a stamp on the worst first half performance in 50 years and if you are wondering what can be done going forward there is some things you can consider.

Check out prior precedence and see what happened before and anticipate a possible recurrence happening again.

Remember I am a pattern trader and if I can find a repeatable pattern I want to strongly consider acting on it.

Of course, I like to see a more frequent trading pattern than once every 50-years, but if history has a chance to repeat In want to use that history to my benefit.

The First Half Decline of the S&P 500 in 1970

Jeff Cox in an article written for CNBC.com says the cost of living started the year running at levels the U.S. had not seen since the early 1980s.

A decade earlier though the S&P 500 was down 21% in its first half of that year.

All was not lost though as the last half of the year the S&P 500 ended up realizing a gain 26.5% in that years’ second half.

Why the Drop This Year

There are a multitude of factors as to what’s accounting for the slide this year such as supply chain demand issues, Russia/Ukraine conflict, slowing down of consumer spending and home buying which all of this seems to be cause for the decline in consumer confidence, but the primary reason it seems for the poor first half is inflation.

The article on CNBC.com I referenced earlier has great insight on the Fed’s inaccurate assessment on inflation and their assessment that it was transitory and how they fell behind the inflation curve that you night want to go check it out in more depth: https://www.cnbc.com/2022/06/30/the-markets-worst-first-half-in-50-years-has-all-come-down-to-one-thing.html

The Last Half of 2022 and What I am Doing

I am going to stick with my proven scans that are based on years of historical back testing.

There are some scans that are working better than others in this market environment like our momentum and volatility scans and my team, and I will lean in to those a bit more.

We will keep an eye on the other scans and when those start seeing results that are more in tune with their historical data we will diversify even more with those.

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