The 'Rebound' From February's Crash Is The 2nd Worst On Record

The bounce in the S&P in the last 24 hours (off unchanged for the year) has saved the major US equity market index from its worst start to a year since 2010.

2018 has also been a 'different' year in terms of volatility.  As Bloomberg notes, a procession of awful days is battering investor nerves. While most of 2018’s sessions have been up ones, when the market falls, it falls hard. Single-day drops are 20 percent bigger than gains, on average, the widest gap in seven decades.

The average move in the S&P 500 is 0.7 percent this year, up from 0.3 percent in 2017. It’s a pace that if maintained would be the biggest increase on record.

Since the peak of the S&P 500 in late January, only Small Caps remain comfortably in the green (because domestic companies are insulated from Trump's trade wars according to the narrative), but The Dow and S&P remain well off their highs...

And as a reminder, in March, Morgan Stanley called the euphoria blow off top the highs for the year.

In fact, this inability of the S&P 500 to get back to its highs after 'correcting' in February - is historic.

Over at Leuthold Group in Minneapolis, they rank equity downdrafts by degrees of pain.

Yesterday, Leuthold's Jim Paulsen warned that "it's been too quiet, for too long" and today Leuthold points out that

While an "intermediate correction" is what everyone hoped February's was (a plunge that never gets worse than about 12%), the odds of it being one of those are shrinking.

Of 33 such episodes over the last 70 years, only one has taken longer to erase...

The exception was in 1994, a selloff that also began in February and lasted two years. Like now, the second year of Bill Clinton's presidency featured a tightening Fed and losses in Treasuries.

Given the tightening of financial conditions, we would not be holding our breath for any immediate return to the highs - in fact quite the opposite...