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Investment Outlook

Bear Market Tracker

Saira Malik
Chief Investment Officer
Tracker points towards in the middle

The Bear Market Tracker is a guide that informs our discussions and debate around the unique dynamics of the current U.S. equity bear market, how it compares to those past, and when we might be close to a bottoming process. While not an exhaustive list, the six variables in our table have frequently shown turning points near the bottom of past bear markets. The colors are assigned based on our view of whether each variable is signaling we are close to a bottom (green), further away (red) or a mixed picture (yellow).

Each variable, however, does not carry equal significance. We believe the humbling task of calling the market bottom is just as much art as (we like to believe) science – thus a more qualitative approach is warranted.

 
December bear tracker

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February update

Since our last update we have seen a softening in inflation readings while the U.S. Federal Reserve continued hiking, albeit at a slower pace.

Our latest update, the first of 2023, sees us shift the market breadth indicator, measured as the percentage of index members trading above their 100-week moving average, from a mixed picture, to being closer to a bottom. This reading now sits at 55%, rebounding from the low of 24% in October. A higher percentage of the index contributing to the recent rally is a positive sign.

Meaningful revisions have brought forward earnings readings back to the start of the bear market, which we see as a positive sign. Hence, we have moved the earnings indicator from a further away reading, to a more mixed picture.

 
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