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Good morning, investors. Stock prices keep falling and the conflict in the Middle East doesn't have a clear end in sight.
That uncertainty has dragged the stock market for a month now.
But history suggests the long-term bull case could still be intact.
Bearish near-term, bullish long term
The S&P 500 has notched four losing weeks in a row and it just fell below a key technical level.
The benchmark index just dipped below its 200-day moving average for the first time in 214 trading days.
The same technical breakdown hit the Nasdaq Composite and Dow Jones Industrial Average to end the week, too.
As bearish as that sounds, history tells a more optimistic story.
Over the last decade, the S&P 500 has dipped below its 200-day moving average on 16 occasions, according to data tracked by TradingView.
These breakdowns have tended to precede strength, rather than prolonged weakness.
Indeed, after this type of technical breakdown, the S&P 500 has averaged a median return of 13.8% over the next year, as well as reliably positive hit rates across shorter time horizons, as the chart below illustrates.
The one exception worth noting here is 2022, when the Federal Reserve was raising interest rates.
The 200-day breakdown that year produced sustained losses across multiple time horizons.
And as challenging as the geopolitical situation appears for asset prices, the historical data suggest the recent technical slippage should not be taken as a definitive sell signal.
UBS strategists, for their part, have maintained their year-end S&P 500 price target of 7,700, implying roughly 18% upside from Friday’s closing price.
Market snapshot
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Elsewhere
📊 OpenAI is tempering its ambitious spending plans. While CEO Sam Altman went to extremes to secure compute capacity in 2025, the company has since tried to pull back expectations ahead of a potential IPO this year. (CNBC)
📉 Investors are fleeing the private credit market. Funds are seeing capital head for the exits and most publicly-traded BDCs are down double-digits. Private credit has long had a reputation for opacity as well as some redemption issues. (Barron’s)
🏥 Healthcare is doing the heavy lifting in the job market. Most of the new jobs over the last year have come from this sector. An aging population will likely keep healthcare employment expanding for years to come. (WSJ)
Rapid-fire
President Trump and Iran’s leaders continue to trade threats and float deal ideas (WSJ)
Gold posted its worst week since 1983 with an 11% drawdown (CNN)
This beat-down financial stock is now cheap with the market mis-pricing the narrative (Best Ideas Club)
Super Micro’s co-founder was indicted for conspiring to smuggle $2.5 billion in Nvidia AI servers to China and the stock cratered (CNBC)
Morgan Stanley said fears of Fed rate hikes this year are overdone (Yahoo Finance)
The Iran war is about to show up in corporate earnings (Opening Bell Daily)
Jamie Dimon sees 3-4 more years for himself as CEO at JPMorgan (Barron’s)
On this day
🗓 March 23, 2020: The S&P 500 hit its pandemic bear market low, down 34% from its February peak in just 33 days, marking the fastest bear market in history.
Last thing
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