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“Fear is the most contagious disease you can imagine. It makes the virus look like a piker.” – Warren Buffett
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After falling 12% on Monday, Japan’s Nikkei bounced back 10% on Tuesday, and US equity futures are currently set to open higher by about 0.75% as of 8 AM ET. As shown below, the carnage from the past few weeks has now left the S&P 500 in extreme oversold territory (>2 standard deviations below its 50-DMA). These are areas where you typically start to see some upside mean reversion, although it’s certainly not a guarantee.
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