Be Greedy When Others are Fearful

Every major stock market bottom has been marked by extremes. Volatility hits a fever pitch, sentiment sours to extreme fear among investors, and market breadth (participation) becomes feeble. Most recently, major volatility spikes and end-of-world sentiment marked the lows of the ‘Liberation Day’ and COVID-19-induced bear markets. However, in rare instances, extreme readings in technical and market indicators can occur during “garden variety corrections”, where the S&P 500 Index and the other major indices are still within shouting distance of all-time highs. Currently, this is exactly what is occurring in the stock market. Although the S&P 500 Index and Nasdaq are each within 6% of all-time…