It was an up week for the S&P 500 as it closed at 4169. However it did mark the return of volatility as Tuesday was down greater than 1%, while Thursday erased those losses with a gain of nearly 2%. Driving much of this turnaround was the strong MegaCap earnings reports led by Meta and Microsoft. Next Id like to look at historical data and something that has not happened since 2021. Last week we mentioned that we are consolidating more with the Bollinger Band Index (Bollinger Band width/Bollinger Band midpoint) now having a low volatility reading of less than 60%. At Fridays close, that BBI reading has crossed below the 30% level. So lets look back at history. In 2020 we had COVID causing extreme market volatility with the BBI surging to 444 on 23 March. This coincided with the S&P 500 bear market low of 2237. It then had a historic bounce back with the S&P 500 standing at 3750 on 31 December 2020. That said, the BBI had scaled back down over those 9 months to 29, signaled the first instance consolidation period after that COVID bull market. Then 2021 marches in and the S&P 500 mimicked a stair-step market with the S&P 500 moving up (BBI above 30) and consolidated back to a BBI below 30 reading five additional times. At 2021 year end the S&P 500 stood at 4766, up over 1000 points. Then we reversed direction and everyone remembers the 2022 bear market. Now what is significant is that Friday marked the first instance of BBI below 30 after that 2022 market low. Could this be the start of a new stair step market similar to 2021. With earnings season looking strong and inflation being tamed, will history repeat itself? No one can predict the future, but with Apple reporting, the Fed meeting and the March Unemployment next week, could this be the first step? For TSP TIPS, we remain well postured and recommend no changes to our current investment mix.
It was an up week for the S&P 500 as it closed at 4169. However it did mark the return of volatility as Tuesday was down greater than 1%, while Thursday erased those losses with a gain of nearly 2%. Driving much of this turnaround was the strong MegaCap earnings reports led by Meta and Microsoft. Next Id like to look at historical data and something that has not happened since 2021. Last week we mentioned that we are consolidating more with the Bollinger Band Index (Bollinger Band width/Bollinger Band midpoint) now having a low volatility reading of less than 60%. At Fridays close, that BBI reading has crossed below the 30% level. So lets look back at history. In 2020 we had COVID causing extreme market volatility with the BBI surging to 444 on 23 March. This coincided with the S&P 500 bear market low of 2237. It then had a historic bounce back with the S&P 500 standing at 3750 on 31 December 2020. That said, the BBI had scaled back down over those 9 months to 29, signaled the first instance consolidation period after that COVID bull market. Then 2021 marches in and the S&P 500 mimicked a stair-step market with the S&P 500 moving up (BBI above 30) and consolidated back to a BBI below 30 reading five additional times. At 2021 year end the S&P 500 stood at 4766, up over 1000 points. Then we reversed direction and everyone remembers the 2022 bear market. Now what is significant is that Friday marked the first instance of BBI below 30 after that 2022 market low. Could this be the start of a new stair step market similar to 2021. With earnings season looking strong and inflation being tamed, will history repeat itself? No one can predict the future, but with Apple reporting, the Fed meeting and the March Unemployment next week, could this be the first step? For TSP TIPS, we remain well postured and recommend no changes to our current investment mix.