November was a good month for investors, as prices for stocks, bonds, and commodities all rose. After the first three quarters of 2022 had us on pace for one of the worst years ever, it was a welcome reprieve. Have we seen the bottom of this bear market?
The S&P 500 Index closed above its 200-day moving average for the first time since April. It’s now 16% off the October lows, when prices found support at the former September 2020 highs. Still, we remain cautious on the index. The 161.8% retracement from the entire COVID selloff lies at 4140, and it has proved to be a key turning point several times this year. Until the S&P 500 shows it can get above that level and hold it, we have to assume this downtrend remains intact.
The Dow Jones Industrial Average has been the leader, and it’s clearly the best positioned now. The DJIA has surpassed its August highs.
The value-tilted index is now just 7% from setting a new all-time highs.
Bringing up the rear is the Nasdaq Composite, still stuck near the June lows. It’s the least constructive of the major indexes and has shown relative weakness all year. Even if this bear market has run its course, there’s no good reason to be heavily involved from the long side until we get back above 12000.
Small cap stocks found support at their pre-COVID highs, bottoming before any of the other major US indexes. The bounce from those lows has been lackluster, though, and the Russell 2000 has struggled to set a higher high or meaningfully exceed its 200-day moving average.