Rising Fear and Monthly Market Declines

After two years of massive returns in U.S. markets and the arrival of a new president known for surprise announcements, it’s more important than ever to review broad market and sector indexes for key support and resistance levels. Looking at sector performance over the past month, Energy leads the way with a 6.47% gain, while all other major sectors are in the red. Real Estate saw the largest decline, down 4.80%, followed by Information Technology, which dropped 3.41%. Most other sectors are down over 2%, with Utilities holding up relatively better, declining just 1.08%. Within the Energy sector, futures are seeing significant gains, with Natural Gas leading the charge, up 31.97% over the last month. Both Brent and WTI Crude are up over 9% during the same period. This has put pressure on major indexes over the last month, with the smaller-cap Russell 2000 taking the biggest hit, down 3.40%. The NASDAQ slipped 2.09%, while mega-caps held up the best, with the smallest decline of 1.57%. In Canada, the situation is reversed, with the S&P/TSX 60 down 2.04%, and the S&P/TSX Mid and Small-Cap indexes down 1.42% and 0.34%, respectively, likely buoyed somewhat due to the collection of smaller energy constituents. Bonds were the standout asset class of the month, with the CBOE 5-Year, 10-Year, and 30-Year up 4.61%, 5.77%, and 5.72%, respectively. It’s also important to note volatility, with the CBOE SPX Volatility Index showing fluctuations over the past quarter. The 3-month number was down 21.90%, while the last month saw a rebound of 16.73%. However, the index dropped again last week, down 13.84%, which may indicate a renewed sense of fear entering in the market.

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