Capital Market Thoughts – Anatomy of a Slowdown Continued – Snap Back Rallies During a Slowing –

With several excellent puzzled questions on the recent market movements last week and the final capture on similar questions of two buddies in my steps from the house Starbucks on Saturday early am … a post was in the works…

This post is an add on to our “Anatomy of a Slowdown” which we spoke about here in our Newsletter’s lead article and again here in our late January post …. but again with multiple excellent questions last week, we thought the additional comments timely…

Weird Snap Backs During a Slow Down

While no one knows for sure, but in if it looks like a duck and quacks like a duck it may be a duck form … for some reason snapback rallies of dramatic proportions are common during market attempts to gauge a slowdown.

Using our most recent dramatic slowdown as an example and please remember that was a very short and brief slowdown compared to the afore mentioned Anatomy articles…. the first snapback was 4.87% then the next at 5.87% and finally a 10.13% snapback…. yep over 10% …. see chart below – know it is busy but wanted to get all three big snapbacks measured…

For whatever reason … these occur frequently during slowdown periods and rarely of that magnitude during normal growth times.

These snapback rallies can ignore things like the worst unemployment report ever recorded (chart above) or even as of last week an invasion of a neighboring country…

Lot’s of theories, maybe some are correct, but in duck like fashion it just seems to happen…

Bottom line, using history as an example, the slowing probing and snapback moves are likely not over…

Stay cool, stay calm and ignore the dramatic headlines!

Have a Great “Snapback Analysis” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.



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