Citi’s ‘Bear Market Checklist’ says to buy the dip. Plus, top pharma ETF picks

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Citi global strategist Robert Buckland maintains a Bear Market Checklist, a series of 18 indicators that have historically helped identify an upcoming bear market. The current readings, after a 16.5 per cent decline for the MSCI All Country World Index year to date, offer a definitive signal: buy the dip.

Only six of the 18 indicators check boxes that represent red flags for equity markets right now, down from a peak of 8.5 in December of 2021. For comparison, 13 of 18 indicators warned of the 2007-2008 bear market and fully 17.5 signals were flashing red ahead of the 2000-2003 tech wreckage. The Bear Market Checklist’s last definitive call occurred during the initial COVID sell-off in the spring of 2020. In February 2020 there were only 5.5 boxes checked – indicating a very low risk of a bear market

The drop to six checkmarks could highlight an important inflection point for equities. It took only a 15 per cent decline in the MSCI All Country World Index to fall to six this time but in 2000-2003, stocks had to fall 47 per cent to get the checklist down to six marks. During the financial crisis, the index fell 49 per cent before the bear market checklist showed only six warnings.

 

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