Market Review: A Turning Point in Q1 2018

The first quarter of 2018 was a significant turning point for the market. This market review highlights a major shift, with the DJIA down more than 2% in the quarter—its first negative quarter in years.

Market Correction: The Longest and Deepest in Two Years

This market review shows that the market has experienced its longest and deepest corrective action in about two years, marking the worst performance since September 2015 when the DJIA dropped 9%. After a steady period of optimism driven by the “fear of missing out,” the market’s momentum shifted in January, creating turbulence and uncertainty.

The Shift in Market Sentiment

In this market review, we note how negative headlines—from political issues to global tensions—had long failed to shake investor confidence. Even President Trump’s controversial moves and global developments like North Korea’s nuclear tests were brushed off as buying opportunities. But by the end of January, the “short volatility” trade unwound unexpectedly, catching market players off guard. The market entered a deeper correction phase, and the previous trend of rebounding from bad news began to fade. Now, the market reflects genuine uncertainty, with no clear path to recovery.

Navigating the Current Market Landscape

As this market review transitions into Q2, investors face a challenging technical setup made worse by a lack of leadership. Formerly dominant big-cap stocks like the FAANG names (Facebook, Apple, Amazon, Netflix, Google) have lost momentum, leaving investors unsure where to place capital. The market is entering a period of weaker seasonal trends, and second-quarter earnings reports will play a pivotal role in shaping sentiment. With the market becoming more selective and less forgiving, this market review underscores the importance of patience, capital protection, and readiness to act when new opportunities emerge.

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