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3 Months Without A 3% Drawdown

3-months-without-a-3%-drawdown

3 Months Without A 3% Drawdown

Last Monday, we highlighted that according to Deutsche Bank strategist Parag Thatte, investors had moved overweight US equities over the prior couple of weeks for the first time since early 2022.

In his updated report published on Friday, this overweight moved from the 64th percentile to the 73rd.

This recent outburst of hopium indicates that discretionary positioning is already in line with a soft landing (i.e., an ISM rebound). It, of course, remains very much unclear if such an outcome is assured.

Then, in Thatte’s latest piece (link here for pro subs) they show an interesting graph that suggests that we’re now in the 85th percentile of periods since WWII without a 3% drawdown in the S&P 500.

This, according to DB’s Jim Reid, translates into 73 trading days and over 3 months in real life. Due to a combination of this, positioning, and where vol currently is, Deutsche Bank think we’re due a 3-5% modest correction.

Tyler Durden
Tue, 06/27/2023 – 12:25

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