Stock Market Rally Coming? And Investing In 2024.

Is a stock market rally coming? I think that is most likely the case. However, to understand why, we must review what we said at the beginning of July in “Complacency Seems Overly Complacent.”

With bullish optimism quickly returning to the market, the pressure to chase performance from the “Fear Of Missing Out” will continue to provide a “bid” under stocks. However, such does not remove the potential for a 5-10% correction. Such corrections are normal within any given year and will provide the best entry point to increase equity exposure near term.”

The chart below, via @TheMarketEar, shows the frequency of declines in each year from 1950 through the end of 2022.

volatility toll

Since the beginning of August, the stock market has come under pressure. Concerns about higher interest rates, a downgrade of U.S. bonds, and an uptick in inflation spooked more bullish investors. The market has declined by roughly 5% from the recent peak through the end of last week.