orange lights on top of white and red metal bars by Matthew Hamilton courtesy of Unsplash.

Caution Amid the Momentum

Matthew Allgood |

 

The S&P 500’s rolling two-year rate of change recently hit the 95th percentile, a historically rare level of growth. While this indicates strong market momentum, history shows that such rapid gains are often followed by a cooling-off period. Exceptions, like the mid-1990s, are rare, and sharp pullbacks are more common once this threshold is reached. 

Staying invested during strong markets is important, but it’s equally critical to acknowledge the heightened risks that come with rapid gains. Proactive risk management is key to successfully navigating both market surges and potential downturns.

Caution Amid the Momentum

A graph showing the percentage of a stock market Description automatically generated

Source: Bloomberg, Redwood. Data as of 11/15/2024. Date Range from 12/31/1942 – 11/15/2024.

Regards,

Allgood Financial

Disclosure: This piece is for informational purposes only and contains opinions of Redwood that should not be construed as facts. Information provided herein from third parties is obtained from sources believed to be reliable, but no representation or warranty is made as to its accuracy or completeness. Charts and graphs are for illustrative purposes only. Discussion of any specific strategy is not intended as a guarantee of profit or loss. Past performance is not a guarantee of future results. The objectives mentioned are not guaranteed to be achieved. Investors cannot invest directly in any of the indices mentioned above. Diversification of asset class is not a guarantee against loss.

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