Friday Charts: More Pain in Spain and Déjà Vu All Over Again

Published Fri, Apr 27th, 2012   Louis Basenese, Chief Investment Strategist

It’s Friday in the Wall Street Daily Nation!

That means the longwinded analysis is out. (Hallelujah!) And some carefully selected charts are in. (Amen!)

So without further ado, check out these snapshots on the bloodletting in Spanish stocks and the uncanny resemblance of the S&P 500 Index’s performance this year compared to 2011, 2010 and 1936.

Can We Get Some Buyers Please?

Last week, we profiled all the bad loans and soaring unemployment in Spain. This week, the Bank of Spain rolled out the recession warning. Based on their estimates, Spain’s first-quarter GDP will shrink 0.4%, marking the second quarter of declines.

Add it all up and nobody wants to own Spanish stocks. Spain’s IBEX 35 Index is down 19.9% year-to-date. (Ouch!)

And it’s down 56.1% from its November 2007 high. (Double ouch!)

However, I have to confess. All the abject bearishness excites this contrarian. It might be time to go dumpster diving in the eurozone. You with me?

Déjà Vu, Anyone?

We all know the Wall Street disclaimer: “Past performance is no guarantee of future results.” Well, I sure hope that holds true for the S&P 500 Index. Otherwise, we could be in for another mid-year swoon.

I have to tell you, though, the latest charts don’t exactly ease my anxieties.

So far this year, the S&P 500 Index is almost mirroring its performances in 2011 and 2010.

If we reach back further into the annals of stock market history, this year’s performance also resembles that of 1936 – another presidential election year with some striking parallels.

Like the fact that the country was emerging from a steep economic slowdown (the Great Depression vs. the Great Recession). And the fact that the size of the Federal Government increased dramatically as a percent of GDP.

As Bespoke Investment Group notes, “If the parallel with 1936 holds, there’s good news and bad news. The bad news is that the rest of April could be rough… The good news, though, is that from April’s low, the S&P 500 never looked back, and by the end of the year the Index was up 27%.”

Here’s to never looking back!

That’s it for today. Before you sign off, though, do us a favor. Let us know what you think about this weekly column – or any of our recent work at Wall Street Daily – by sending an email to feedback@wallstreetdaily.com, leaving a comment below, or catching us on Facebook or Google+.

Thanks and enjoy the weekend!

Ahead of the tape,

Louis Basenese