How to spot the stock market bottom

Is the U.S. economy headed into recession? The signs are all there.

Even though a recession isn’t part of the Fed’s official forecast, Fed Chair Jerome Powell conceded during the May post-FOMC press conference that the Fed’s staff economists were calling for a mild recession. Carl Quintanilla of CNBC also reported that the overwhelming consensus from a JPMorgan investor survey was for a recession to begin in H2 2023.

Here’s why the recession question matters. The historical record shows that the stock market only bottomed after recessions have begun (shaded areas are recessions). If the economy does enter a recession, chances are, investors haven’t seen the bottom of the current bear market yet. That doesn’t mean, however, that NBER has to declare a recession before the stock market bottoms as NBER tends to be glacial in its evaluation of economic data and slow to react. 

 

If a recession is ahead, here are some ways to spot the market bottom.

The full post can be found here.