Yesterday, growth stocks experienced a significant setback, with the Russell 1000 Growth Index ending the day down 3.8%. This marks the largest one-day drop for the index since September 2022. To illustrate how unusual this decline is, there have only been 67 trading days since 1991 where the index lost as much as it did yesterday, placing it in the top 1% of the worst days in the index’s history.
Historically, a statistically significant down day for growth stocks is bullish for the index. Examining past instances of such declines reveals that average returns across multiple timeframes are positive, with a relatively high percentage of positive outcomes.
What makes yesterday’s decline even more promising is that it occurred while the index was above its 200-day moving average. Typically, large declines happen below longer-term moving averages. Large downside moves above the moving average, like yesterday’s, are often consistent with near-term bottoms in the index.
Why is this important?
Investor anxiety over short-term volatility can derail even the best-laid investment plans. By focusing on data and using history as a guide, Bruce Wood Capital is here to provide the expertise and support you need to stay on course. Trust us to help you navigate these turbulent times and make informed decisions that align with your long-term financial goals.
