Drawing market comparisons over a 20-year period can very be difficult. The catastrophic terrorist attacks on Sept. 11, 2001, had long-lasting implications and its 20th anniversary happens to take place in the midst of a nearly two-year worldwide health crisis.

How The Market Looks

In some ways, they're similar and in some ways very different, but this author sees one major difference. Following the attacks on the US, stock exchanges closed between Sept. 11, 2001, and Sept. 17, 2001. Historians have to go back to 1914 when World War I broke out for the last time the markets were closed for such a long stretch. The closure largely prevented the “run” on the market.

With a vital part of the financial markets in ruins and unable to function, regulators had no choice in the matter. Whereas when the markets were in chaos when then-President Trump declared a national emergency on March 10, 2020, regulators decided to keep the markets open because of the robust electronic market structure that had been created over the previous two decades.

Although the outcome of the markets in March 2020 was inevitable, our financial systems didn't succumb to a potential calamity that could have been much worse had the markets been shuttered for days.

Price Action In Place

Where the two events are similar is the devastating price action that was already in place and continued on. Prior to 9/11, the market was already under extreme selling pressure (some speculate in a nefarious way), which was similar to the price from February 2020, when the world was coming to grips with the impact of the COVID-19 pandemic.

While focusing on the events from March 10, 2020 and thereafter doesn't perfectly align with the 20th anniversary of 9/11, the current status of the market does. The major difference between these time periods was the time it took to find a bottom and make a new all-time high.

• The S&P 500 index didn't bottom until October 2002 and didn't return to pre-9/11 levels until early 2004.
• In an extended flash crash, the index bottomed on March 23, 2020, and remarkably was able to make new all-time highs in August and it hasn't stopped.

Where We're At

Fast forward to Sept. 10, 2021, the last trading day ahead of the anniversary. In a holiday-shortened week, the index was in the red in every single session, with the most damage coming on Friday. That marks the longest losing streak for the index since mid-February when it was down five days in a row.

While the sell-off this week took place for a variety of different reasons, it should make one cautious moving forward. With the markets having such an unprecedented run without a major correction, market participants will need to determine one of two things: Is the retreat just another “buy the dip” opportunity, or are the markets due for a prolonged and much-needed retreat?

A good indication may be the index's ability to bounce back next week. Only twice in 2021 has the index declined two weeks in a row, that being in mid-May and late February. As always, investors should take into consideration where they're at in their investment cycle and use that to determine their investment strategies moving forward.