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“The definition of insanity is doing the same thing over and over again, but expecting different results.“ – Albert Einstein
While it wasn’t the only factor behind yesterday’s decline, a key event that spooked many investors (and computers) was a comment from UK Chief Scientific Adviser Sir Patrick Wallace who said that 60% of UK COVID hospitalizations were fully vaccinated. Later in the day, shortly before the US close, he clarified his remarks to say that his numbers were reversed and that less than 40% of all hospitalizations were fully vaccinated. That was a pretty big error, but one that caused some relief on the part of investors as stocks finished off their lows of the afternoon.
Today, futures are higher again, but still well below where they closed Friday. Rising COVID cases have been one driver of the weakness but not the only headwind facing the market. In the short term, investors will also have to contend with weak seasonal trends as well as high expectations heading into earnings season.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, the latest US and international COVID trends including our vaccination trackers, and much more.
One thing that’s been happening over and over again in the market is that every time the S&P 500 tests its 50-day moving average (DMA), it has managed to bounce. Over the last year, there have only been two times where the S&P 500 closed below its 50-DMA and continued to decline meaningfully from there. Both of those occurrences were last year. Before yesterday, there were six other times this year where the 50-DMA came into play and each time the S&P 500 bounced significantly from there. Obviously, this can’t keep going on forever, but in the short-term, but until it doesn’t work anymore, the ‘buy the dippers’ will likely stick with what has worked.
