All it took was a short squeeze in stocks that few mainstream investors care much about to bring on the largest decline in three months…
The S&P 500 index fell 3.3% to 3714.24, while the Dow Jones Industrial Average dropped 1,014.36 points, or 3.3%, to 29,982.62, and the Nasdaq Composite slid 3.5% to 13,070.69. All three suffered their worst drop since the week ended Oct. 30, while the S&P and Dow finished January down 1.4% and 2%, respectively.
The pullback comes right on schedule. This February is the second month of the presidential cycle, and it’s usually quite terrible, with the market averaging a 1.1% drop. Every sector has averaged a loss during the second month of the presidential cycle. It isn’t that every February is bad—returns were positive 12 times out of 23—it just tends to be that way. “You should NOT assume that February of 2021 is ‘doomed’ to be a bad month for stocks,” according to Sundial Capital Research’s. “What you DO need to recognise is that when Month two is ‘Good’ it is OK. And when Month two is bad it is often very bad.”
Hang on to your hats!
This was supposed to be the Teflon stock market, able to absorb political turmoil, a resurgent virus, and mediocre data, and keep on rising. Then Reddit discovered GameStop.
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