The S&P 500 is set for its biggest yearly fall since the global financial crisis

  • Down by 7.7% on the year
  • Down by 10.6% on the month
  • Set for its biggest monthly fall since February 2009
  • Set for its biggest December month fall since the Great Depression
  • Set for two consecutive weekly closes below 100-day MA, first since Q1 2016

What a difference three weeks can make. At the start of December, the S&P 500 peaked at ~2,800 and at that point in time, the index traded 4.7% higher on the year. The index opened the December month with a 1.1% gain.

Fast forward to today, we're staring at the worst monthly performance since February 2009 when the index dropped by 11.1%. As for December seasonality, if the month were to end here, it would be the worst December monthly performance since the Great Depression.

While Trump is very much a 'Dow man', the S&P 500 is often seen as arguably the more reflective measure of US stock market performance. And when you see symptoms like the above, it's hard to argue on the case of "when does the bleeding stop?".

The index closed yesterday 16.1% lower from the peak this year during September and is on the verge of entering into a bear market, much like what we're seeing across global equities at the moment.

At some point, investors will turn towards valuations to look to reenter into long positions but the fact of the matter is that current headwinds that are still blowing remain strong in the form of global growth slowdown, US-China trade tensions still unresolved, Fed continuing to hike rates next year, and yield curve inversion sparking fears of an imminent recession among other things.

That said, the only thing certain is that we are set for more testing and uncertain times for risk and equities next year. If December's performance is just a prelude, then investors should expect more pain and volatility to come in 2019.

In times like this, I'm always reminded of the old adage: "Buy value, sell hysteria", to quote Jim Rogers. But at some point, the headwinds above will weigh on equity valuations as well and that's when you adopt a "never catch a falling knife" approach before reverting back to the first quote.

Ah, what am I yapping about. Markets will just do what it wants to do regardless. Am I right, Mr. Mnuchin? ;)