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60 Days Without A 5% Correction And Counting

Tyler Durden's picture




 

The beginning of every year under the New "centrally-planned" Normal regime is no stranger to seemingly relentless rallies: while in the first 29 trading days of 2013 alone, the benchmark S&P 500 Index has gained a respectable 6.5%, such initial strength out of the gates has in fact been the norm over the past three years, with the S&P 500 returning 7.5% and 5.7% during the first 29 trading days of 2012 and 2011, respectively. And, just like in 2013, both prior occasions were spun by pundits as indicative of great rotations, economic recoveries and what not, until reality reasserted itself when the gobs of liquidity pumped by western central banks finally made their way to China and sent local inflation surging at which point China pulled the plug in the "great reflation." This time will not be different, especially since as we showed yesterday, the market is now more bullish than 99% of all prior readings.

And while the recent spike in the market has been less acute than on previous occasions, what is notable about the current rally is the duration without any marked correction. As the following chart from Stone McCarthy shows, since March 2009, there have been only 4 times in which the rally continued for a longer period of time without a notable, or >5%, correction.

From SMRA:

The number of trading days that the S&P 500 has been rising without a correction of greater than 5% is now at 60. (Note: For this report, corrections are measured using closing daily levels.) Not surprisingly, going unchecked for so long has prompted a sharp increase in the number of talking heads proclaiming that the market is due for a pullback of at least 5% - 7%. While we are also in this camp, based mainly on combination of market breadth, extreme sentiment, wave structure and intermarket divergences, we also respect the fact that stimulative policies continue to manipulate market psychology.

 

As today's report uncovers, the current 60-day stretch without a correction of > 5% is longer than both the average and median stretch since the start of the post-March 2009 rally. In terms of percentage return, however, the current 12% rally from the 11/15/12 low is still shy of the 15% median and 18% average.

 

 

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Wed, 02/13/2013 - 09:14 | 3239923 fonzannoon
fonzannoon's picture

why would the market drop in a global currency war? If you are winning the war that means you are debasing the shit out of your currency. If you are losing that means you are about to debase the shit out of your currency. It's a win win with no negative consequences. When you start to think you are seeing inflation just punch yourself in the face until you are unconscious.

Wed, 02/13/2013 - 09:28 | 3239941 SamAdams
SamAdams's picture

The market remains irrational (because it is not a true market), but for how much longer?  I left my money in even as all signs were pointing to unsustainable, but finally moved to cash last Friday.  I don't think this resistance will be solidly tripped without a noticable pullback.

Wed, 02/13/2013 - 09:46 | 3239964 scatterbrains
scatterbrains's picture

I'd like to know what plan Bernank is working on to try to stop the unstoppable run on central banks? Sovereigns are repatriating their physical gold or buying enormous amounts of gold as quickly as they can without disturbing gold prices.. all the while the u.s. dollar time bomb is ticking away. Will BB attempt some last minute trick to stop the gold run ?  At that point I think all the paper markets flush down the toilet.

Wed, 02/13/2013 - 09:47 | 3239972 fonzannoon
fonzannoon's picture

I think his plan is to keep raising taxes and keep the economy in te shitter and knock gold prices down until even the 1% are pawning their shit at those cash for gold shops.

Wed, 02/13/2013 - 09:54 | 3239988 Whiteshadowmovement
Whiteshadowmovement's picture

ding, ding, ding!

This is why I love ZH, when you really look at the scatter plot above, what should strike you is that this current rally isnt even close to an outlier!

Besides on avg. a 17.9% rally followed by a 9.3% correction- central planning sounds terrifying doesn't it?

Wed, 02/13/2013 - 10:41 | 3240135 John Law Lives
John Law Lives's picture

A $16+ Trillion national debt and $1+ trillion annual budget deficts are terrifying, and central planning is help making that possible.

 

Wed, 02/13/2013 - 10:49 | 3240168 Whiteshadowmovement
Whiteshadowmovement's picture

not helping, its the reason for central planning's existence

Wed, 02/13/2013 - 09:57 | 3239993 scatterbrains
scatterbrains's picture

I see what your saying.. basically he wants to smash to bits americans ability to escape the fiat toilet bowl while at the same time provide non-reserve currency nations some time to loot the world supply of physical gold via his gold price suppression operations.  Awesome

Wed, 02/13/2013 - 10:04 | 3240015 fonzannoon
fonzannoon's picture

It's all good though because the 25k in your 401(k) is going to rise another 15% this year to try to compensate for you paying more for shittier products.

If you have a few mil in the market that is another story. You can ride the wave. Just make sure to get out before they tank this shit to pieces. Think about the beauty of it. Imagine the day when they surprisingly stop all QE, let interest rates spike, and let some republican explain to you that the only way out of the currency crisis is with massive cuts to all pensions/entitlements. Sorry, but first you got crushed by inflation. Then you get crushed by deflation. But the big club has their almightly dollar and more buying power than they ever dreamed while you cough up your ass trying to make it another day. That is how I see it.

Wed, 02/13/2013 - 10:09 | 3240031 Whiteshadowmovement
Whiteshadowmovement's picture

I think as long as they are allowed to keep make everything up among themselves (ie who has what assets within the banking/reserve system) you'll keep getting that 15% in your 401k... I think that "day" is a long, long way off

Wed, 02/13/2013 - 10:13 | 3240045 fonzannoon
fonzannoon's picture

As long as people keep eating their 11 inch subway footlongs and their donkey meat double burger's it will go on and on. Most likely when they are literally sitting down to eat an actual shit sandwich will the metaphor possibly pop up and hit them in the face.

Wed, 02/13/2013 - 10:24 | 3240075 Whiteshadowmovement
Whiteshadowmovement's picture

Oh fonz, you eternal optimist you...

theyve been eating shit sandwiches for years now:

http://www.youtube.com/watch?v=62virq_Kk0M&feature=player_detailpage#t=2...

Theyll eat much worse, all you gotta do is pay 'em a few bucks to be on a reality show...

Wed, 02/13/2013 - 10:36 | 3240118 fonzannoon
fonzannoon's picture

You are Johnny on the spot with those commercials.

Wed, 02/13/2013 - 10:43 | 3240143 Whiteshadowmovement
Whiteshadowmovement's picture

and they say my generation wasted its youth in front of the TV!

Wed, 02/13/2013 - 10:38 | 3240127 Whiteshadowmovement
Whiteshadowmovement's picture

When I was a kid commercials were trying to explain how I wasnt getting enough of the pizza 'food group':

http://www.youtube.com/watch?v=pQBan9MOy60

lol, what I wouldn't give to have been a fly on the wall the day they invented pizza-bagels:

"Goddamnit Jim, the kids these days aren't getting enough pizza in their diet, how can we package pizza so they'll eat it more often, for breakfast let's say...?"

Wed, 02/13/2013 - 10:15 | 3240050 otto skorzeny
otto skorzeny's picture

there was an article in crain's chicago biz this week that high end pawn shops are setting up storefronts in upscale burbs in IL-these are 5%er towns

Wed, 02/13/2013 - 09:17 | 3239924 GetZeeGold
GetZeeGold's picture

 

 

Hand the American people the check please.

 

While you're at it...please roll the dessert cart over here.

 

Wed, 02/13/2013 - 09:37 | 3239956 new game
new game's picture

FREE - the entitlment pigs are 50 percent and growing in numbers.

choice is yours - join the rank and file of free fucks or fight for your liberty...

texas here i come.

time to say goodbye fed gov - don't want your stuff and the attached control.

past due if you believe...

Wed, 02/13/2013 - 09:35 | 3239925 Sudden Debt
Sudden Debt's picture

it's like 6 days without sex...

but after day 6.....

BOEYAAAHHH BABY!!! DOGGY OR ON YOUR BACK, I'M GOING  IN!!

TAKE WHATEVER POSITION THAT GIVES YOU MOST GRIP!

Wed, 02/13/2013 - 09:16 | 3239926 DavidC
DavidC's picture

Is that an Excel display?

DavidC

Wed, 02/13/2013 - 09:17 | 3239928 realtick
Wed, 02/13/2013 - 09:18 | 3239930 babylon15
babylon15's picture

It will make it all up when it corrects 90%.

Wed, 02/13/2013 - 09:22 | 3239935 ekm
ekm's picture

Ok, let me repeat this again.

Any point above DOW 10k, is simply primary dealers bouncing the same stocks to each other. Retail is priced out at dow 10k.

 

It is impossible and improbably that the market goes down. The market can only:

1) Creep up

2) Total collapse by at least 1000 dow pts/day for 3 days in a row.

 

Until number 2 occurs (out of no news, out of nothing), number 1 will continue to apply.

Wed, 02/13/2013 - 09:24 | 3239940 ekm
ekm's picture

Dow may even go to 50k, and it will make absolutely no difference.

GS sells to MS who sells to JPM who sells to C who sells to BAC who sells it back to GS.

 

Until................all finance employees are fired and the gov is forced to pull another Lehman in order to let stocks flood the market, at Dow 5k.

Wed, 02/13/2013 - 09:54 | 3239989 Downtoolong
Downtoolong's picture

You missed a few steps. The bankers collect their mega bonuses first. Then it collapses and they make another fortune and mega bonus shorting the market on the fall.

We all keep missing the most fundamental aspect of all of this, which admittedly is the hardest thing for rational people with a conscience to understand, i.e., the TBTF banks and PTB like it this way.

 

Wed, 02/13/2013 - 10:18 | 3240056 otto skorzeny
otto skorzeny's picture

this economy would be back on its feet if we had alot of pain in 08 and 09 without CBI and people keeeping $ out of markets because of fear of a big drop again.

Wed, 02/13/2013 - 09:41 | 3239948 Lewshine
Lewshine's picture

I agree with Ekm,

When equities are being babysitted on a tic by tic basis, there is absolutely no chance to see a significant pullback. The banks have made it their first priority to keep the market humming along. NOTHING will discourage this action except a catastrophe greater than the sum of all banks depth of liquidity...Which is basically betting on David vs. Goliath less his slingshot. ZH will be writing the same stuff when the Dow is at 15000, around August of this year - while we are paying 5.00 a gallon for gas, $200. for a bag of groceries. They have and will continue to hide the equity parabol in cost of survival. Get used by it.

Wed, 02/13/2013 - 09:48 | 3239974 fonzannoon
fonzannoon's picture

I would agree that the dow will go to 50k and then drop 1k a day for 3 days and we will settle in around 47k.

Wed, 02/13/2013 - 10:24 | 3240074 ekm
ekm's picture

I like your sarcasm, but my point is that at dow 50k, there would be absolutely no stocks available for trade, hence 50% of wall street will have to shut down shop.

 

That's why Lehman collapse was engineered. To flood the market with securities, otherswise.....bye bye wall street.

Wed, 02/13/2013 - 10:34 | 3240115 fonzannoon
fonzannoon's picture

ekm you know I am just being a wiseass. I respect your point. I have completely lost interest and at this point am just trying to figure out what happens to the governer on "the walking dead".

I know one thing for a fact. I don't have much more left in the tank to keep rearranging the deck chairs in the titanic.

Wed, 02/13/2013 - 10:03 | 3240009 Nid
Nid's picture

"When equities are being babysitted on a tic by tic basis,"

Winner winner...

Wed, 02/13/2013 - 09:42 | 3239966 espirit
espirit's picture

I think the wildcard here is tangible assets, i.e. commodities, pm's, etc.  Do you really believe the tangibles are going to deflate?

After all, there has to be base for worth or wealth.  It is unfortunate though that the U.S. dollah is the fastest horse in the glue factory.

Wed, 02/13/2013 - 09:49 | 3239976 fonzannoon
fonzannoon's picture

Even that douche LIEsman was questioning why they have to keep pumping up the minimum wage level if there is no inflation.

Wed, 02/13/2013 - 10:08 | 3240027 DOT
DOT's picture

The spin may be that since a minimum wage of $9.50 was proposed by Obama back in the day, the new proposal of only $9.00 per hour is actually a "cut" possible only because the economy is "fixed".

 

 

Wed, 02/13/2013 - 09:55 | 3239985 TheDarkKnight
TheDarkKnight's picture

BULLISH

Fed is actively managing investor sentiment with their broken tool called the 'market', BTFD and see you at 20k DIJA. And if im wrong well theres a lot worse things to worry about than market corrections and bullish indicators.

 

edit: fuck you bernake

Wed, 02/13/2013 - 10:20 | 3240002 thismarketisrigged
thismarketisrigged's picture

we had a correction monday, the dow finished down 21 pts and the s&p was down 0.89 pts.

 

thats a huge correction in this market, now the criminals will bring us up to 15000 dow and 1600 s&p before we repeat the same pattern, -30 pts dow and - 1 s&p and on our way to new highs.

 

fuck obama, draghi, bernanke, japan, china, fuck every banker, no one deserves to lose there shirts more than these bastards. i am praying for the day that goldman sachs, jpm, bac, c, all those stocks just crash and hopefully we dont fucking bail these bastards out again.

 

all u need to know what a bunch of criminals they r. this is the amount of money each of these banks have recieved from fed so far, but ya the market is doing great on fundimentals.

 

Citigroup: $2.5 trillion ($2,500,000,000,000) Morgan Stanley: $2.04 trillion ($2,040,000,000,000) Merrill Lynch: $1.949 trillion ($1,949,000,000,000) Bank of America: $1.344 trillion ($1,344,000,000,000) Barclays PLC (United Kingdom): $868 billion ($868,000,000,000) Bear Sterns: $853 billion ($853,000,000,000) Goldman Sachs: $814 billion ($814,000,000,000) Royal Bank of Scotland (UK): $541 billion ($541,000,000,000) JP Morgan Chase: $391 billion ($391,000,000,000) Deutsche Bank (Germany): $354 billion ($354,000,000,000) UBS (Switzerland): $287 billion ($287,000,000,000) Credit Suisse (Switzerland): $262 billion ($262

Wed, 02/13/2013 - 10:07 | 3240025 Fiat agnostic
Fiat agnostic's picture

There is a clear connection between QE and the level of the stock market and there is absolutely no sign QE is going to stop. The bond market is more important for the functioning of the state and will be given priority over the stock market. Apart from little speed bumps the stock market will keep rising until the funds invested in it are needed to keep the bond market from collapsing - then there will be a contrived crisis to encourage people into the 'safety' of bonds. Remember that even though stocks keep rising their 'real' value for an investor is flat to down. Only PM's will preserve purchasing power.

Wed, 02/13/2013 - 10:12 | 3240044 Being Free
Being Free's picture

In the data presented in the table, in all cases the "Peak Day" occured on a Friday or Monday (or Tues after Holiday).

7 times it was a Friday

4 times on Monday (includes once on Tues after Monday holiday)

Just saying.

Wed, 02/13/2013 - 10:25 | 3240079 orangegeek
orangegeek's picture

SP500 hourly looks just plain bizarre, particularly in the last couple of days - inching along in a perfectly horizontal direction.

 

http://bullandbearmash.com/chart/sp500-hourly-pushes-sideways-push/

Wed, 02/13/2013 - 10:29 | 3240096 dark pools of soros
dark pools of soros's picture

if they really are going to fleece, they will juice the market another 50% then rip it down 75%

 

Wed, 02/13/2013 - 11:03 | 3240204 847328_3527
847328_3527's picture

I took some money off the table this week into the rally..why not? better have pre-tax 15-20% then nothing. And it's no pain simple tap of the button....easy way to make money....that's why I can't understand why some htink RE is a good investment. Fees and commissions galore, not to mention maintenace, rough tenants, insurance and so on...complex and risky.

 

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