Oops. Stocks fell through a key support on Tuesday and it looks like some recent momentum has now petered out. The new line in the sand for the S&P 500
SPX,
-1.44%
seems to be 3,900. Whether Santa eventually comes or not is still to be determined, with Mr. Claus perhaps postponing a decision until next Tuesday’s CPI release. But what’s clear is that the U.S. stock market is still in a bear market. And with that in mind, equity strategists at BNP Paribas mined 100 years of crashes to try to determine what’s next.
Strategists led by Greg Boutle, head of U.S. equity and derivatives strategy, are expecting a capitulation event next year. “This would be a departure from the current bear market regime, which has been characterized by a grind lower in equities as P/E multiples have contracted,” they say. The most recent crash — the COVID-19 slump of March 2020 — is a bad template in their view, as it was driven both by the extreme nature of economic shutdowns and rapid monetary and fiscal responses. Nor do th …