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Contained? Dow "Range-Bound" Streak Reaches Longest Ever

Tyler Durden's picture




 

At 38 consecutive days, it is now the longest streak without the Dow hitting either a 1-month high or low in at least 100 years. That milestone alone would justify discussion, but as Dana Lyon notes, the current 1-month range in the Dow is a very tight 1.58% (the 17th narrowest 1-month range since 1990). Simply put, the bar for setting a 1-month high or low has been very low for the Dow, yet it has been unable to achieve one; but given the length and amount of the market compression, one might expect it to explode one way or another once the streak was broken.

 

As Dana Lyons details,

On April 24, we posted what we thought (and hoped) would be our final post concerning the stock market’s lengthy trading range. In the post we noted that for only the 8th time in 100 years, the Dow Jones Industrial Average (DJIA) had made it to 30 days without hitting either a 1-month high or low. It was, in our view, a pretty remarkable stat. Little did we know, however, that 8 days later, the streak would still be alive. And at 38 consecutive days, it is now the longest such streak in at least 100 years. The only longer streak in history occurred in 1910 and lasted 45 days (although the daily data from that era is a little sketchy so it’s possible that our current streak is the longest ever.)

That milestone alone would justify an update to the April 24 post. However, there is yet another angle to this streak that is pretty remarkable. The current 1-month range in the DJIA is a very tight 1.58%. It is so tight in fact that it accounts for the 17th narrowest 1-month range since 1990. For those scoring at home, that places it in the 0.6th percentile of all 1-month ranges. In that context, the DJIA’s record streak without a 1-month high or low is that much more amazing considering how low the bar has been for achieving a new high or low.

 

 

Consider this: of the other 7 streaks of 30 days without a 1-month high or low over the past 100 years, the average 1-month range was nearly 5%. Only 1 other streak had a range as low as even 2.50%.

On the flip-side, what of the 16 1-month ranges historically that have been tighter than our current conditions? Did they see streaks without a 1-month high or low of any significant duration? Well, 2 of the 16 did see streaks of 23 and 25 days. However, the average streak of the other 14 was about 4 and just one went at least 12 days.

So it is readily apparent that streaks this long without a 1-month high or low are extremely rare. It is also extremely rare to see a 1-month range in the DJIA as tight as 1.58%. It is flat-out unprecedented to see the DJIA on such a streak while also within such a tight range. Again, the bar for setting a 1-month high or low has been very low for the DJIA, yet it has been unable to achieve one. This provides context to how truly historic the current range has been.

Unfortunately, we cannot compare outcomes following similar markets since, well, there have not been any. And to be honest, it is difficult to draw any conclusions, forecasts, value, etc. based on this historic streak and range outside of simply a bit of trivia. One would think that due to the length and amount of the market compression that it would explode one way or another once the streak was broken. However, as we have seen in this post, anything can happen.

Hopefully now this is our final post on the topic of the recent trading range. If we go another 8 days inside this range, frankly I’m going to start getting a little scared.

 

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Thu, 05/07/2015 - 15:47 | 6070213 Osmium
Osmium's picture

Of course it will esplode to the upside.  Markets only go up.

Thu, 05/07/2015 - 15:59 | 6070273 Rainman
Rainman's picture

Bullish for sales of my Dow 20k hat inventory !

Thu, 05/07/2015 - 16:04 | 6070287 NoDebt
NoDebt's picture

What helicopters do in movies: esplode.

(Tell me at least one other person remembers this ZH reference).

Thu, 05/07/2015 - 16:40 | 6070433 Gambit
Gambit's picture

Black Firday Anyone??? Dow down 1000+ points?  

 

If this shit breaks to the down side, it shall be epic. 

Thu, 05/07/2015 - 16:46 | 6070455 DavidC
DavidC's picture

Gambit,
That's why it's range bound. The Central Banks are TERRIFIED of ANY correction because they know that if starts, it won't stop. Every time there's a move down, some 'mysterious' buyers come in and pump it back up again.

And, as ever, it will only work until it doesn't. The Central Banks do not operate in a vacuum and they are not omniscient.

DavidC

Thu, 05/07/2015 - 15:48 | 6070218 MFL8240
MFL8240's picture

More air in a pathetic economy!  Lying will not created an economy Hussien.

Thu, 05/07/2015 - 15:49 | 6070222 DetectiveStern
DetectiveStern's picture

We range bound some folks.

Thu, 05/07/2015 - 15:49 | 6070226 centerline
centerline's picture

Place your bets folks! 

Thu, 05/07/2015 - 16:02 | 6070284 NoDebt
NoDebt's picture

I bet the streak will continue.  

Thu, 05/07/2015 - 16:32 | 6070401 KnuckleDragger-X
KnuckleDragger-X's picture

Until it doesn't, then the fun will start.....

Thu, 05/07/2015 - 16:34 | 6070409 Panem et Circus
Panem et Circus's picture

Skynet has taken over.

Thu, 05/07/2015 - 15:51 | 6070231 Serfs Up
Serfs Up's picture

"One might expect..."

I found your problem right there.

Not worth 'expecting' anything from a manipulated market.

Thu, 05/07/2015 - 15:51 | 6070237 FreeShitter
FreeShitter's picture

New norm when you own the software.

Thu, 05/07/2015 - 15:52 | 6070239 Kreditanstalt
Kreditanstalt's picture

Scared?  They HATE volatility.  But...what "market"? 

 

All it is is a number of huge hedge funds, mutuals, insurers, banks and central banks swapping a handful of shares every now and then...all by machine.  They WANT steady prices: this is their collateral.  They have MASSIVE leverage.   They want those dividends, that YIELD...  They NEED it.  They lust for it.  And...higher prices mean better prices when you sell later to the buyback companies...

This isn't a "market"...there are no real individuals participating.

Thu, 05/07/2015 - 15:52 | 6070242 Mr_Potatohead
Mr_Potatohead's picture

The first move will be a head-fake.  Wouldn't be surprised to see algos have a field day with additional head-fakes before heading south for a "correction" big enough to justify QE4.

Thu, 05/07/2015 - 15:53 | 6070246 i_call_you_my_base
i_call_you_my_base's picture

The fed has a bottom on it. Not hard to understand.

Thu, 05/07/2015 - 15:54 | 6070250 IntercoursetheEU
IntercoursetheEU's picture

Cardiac arrest, fetch the defib...

QE metaphor from Baseketball:

https://www.youtube.com/watch?v=CsWFLaHiQa8

Thu, 05/07/2015 - 16:23 | 6070359 Salsipuedes
Salsipuedes's picture

Their hearts are in the right place so I think Little Joey will make it. Old Uncle Sam, however, is DOA.

Thu, 05/07/2015 - 16:02 | 6070279 Yen Cross
Yen Cross's picture

     One thing's for sure... The banksters will blow the top off to destroy any competition before the elevator ride down.

 Part of the reason the ranges are so tight is beacause everyone is HEDGED and cross~x~hedged to the hilt.

    I think Tyler is spot on regarding liquidity.

  How can you fix a problem, if you own the problem?

    No amount of $ printing can fix a casino that's run out of chips...(liquidity)

Thu, 05/07/2015 - 16:03 | 6070286 Keltner Channel Surf
Keltner Channel Surf's picture

I only trade free range indices

Thu, 05/07/2015 - 16:06 | 6070292 BullyBearish
BullyBearish's picture

VIX unch today...just wait for the BS numbers tomorrow as a catalyst

Thu, 05/07/2015 - 16:07 | 6070297 tedstr
tedstr's picture

Fear the Doji at the top.  TURN THOSE MACHINES BACK ON!

Thu, 05/07/2015 - 16:08 | 6070300 fremannx
fremannx's picture

The Dow Industrials are completing an Ending diagonal triangle while at the same time it is diverging from the Transports. That is a Dow Theory non-confirmation which, according to the theory, predicts an impending collapse in the stock markets. 

http://www.globaldeflationnews.com/dow-jones-industrial-averageelliott-w...

Thu, 05/07/2015 - 16:37 | 6070424 Panem et Circus
Panem et Circus's picture

Blah blah blah. Look, it's as simple as this: there is no "market" anymore.

Call it what you want, but there is no true price discovery anymore. It's just computers that have learned to trade things that are now trading those things with other computers that have learned to trade things.

Thu, 05/07/2015 - 16:59 | 6070496 Ajax_USB_Port_R...
Ajax_USB_Port_Repair_Service_'s picture

Right! If there was a 'market', it would have been down hard yesterday and again today. It must be costing (us) a fortune to keep this thing levitated.

Spam, ammo, precious metals, and booze are gonnaa shine. AFTER that phase, I WILL buy the dip! Dip - hell. It's going to be a frickn' disaster.

Thu, 05/07/2015 - 16:08 | 6070303 czarangelus
czarangelus's picture

Look, it's obviously time for QE4. There is no way they're going to turn course now after running so far aground.

Thu, 05/07/2015 - 16:09 | 6070305 Salsipuedes
Salsipuedes's picture

The answer is analyzed in depth in this scientific study:

https://www.youtube.com/watch?v=wEpbkk26RcA

At this point, I like "melt the road and drink beer."

Thu, 05/07/2015 - 16:11 | 6070315 katchum
katchum's picture

If the market keeps breaking when it goes down, we can be range bound forever.

Thu, 05/07/2015 - 16:17 | 6070336 I Write Code
I Write Code's picture

I've been calling this since about November, it's the Yellen Equilibrium.

Thu, 05/07/2015 - 16:22 | 6070351 khakuda
khakuda's picture

Yes, magical how S&P appreciation has so closely matched the % growth in the size of the Fed's balance sheet each year over the past several years.  No QE since November, no appreciation.

Thu, 05/07/2015 - 16:22 | 6070352 juggalo1
juggalo1's picture

I'm surprised you consider it remarkable that the DOW would have a low range in the context of a long streak of failure to hit a new high or low.  As long as no new high-lows are struck the range must by definition contract.  It can only expand when it hits a new high or low.

Thu, 05/07/2015 - 16:27 | 6070373 Thalamus
Thalamus's picture

Obviously the Executive order 12631 is being used to put in a floor, but not to ramp up the market, so when that floor is removed we'll see how far they let it fall.  What a manipulated market.  

Thu, 05/07/2015 - 16:36 | 6070420 CarpetShag
CarpetShag's picture

Classical needle dick formation.

Thu, 05/07/2015 - 16:44 | 6070449 Klemens
Klemens's picture

On May 4 1515, the 500th anniversary of which was this month, Medici Pope Leo X (Giovanni di Lorenzo de’ Medici), issued a papal bull permitting interest on loans of money if the loans were to the poor. This revolutionary permission was granted for so-called charity banks, which were known as Monte di Pieta, which translates as “mountains of compassion,” but quite a bit of the revenue ended up in the hands of the Medici bankers, not the poor, and even if these usury banks had been operated for the alleged benefit of the indigent alone, they were violating God’s law and creating a precedent for more usury.

http://revisionistreview.blogspot.de/2015/05/may-4-1515-reign-of-loansha...


Thu, 05/07/2015 - 16:55 | 6070479 Yen Cross
Yen Cross's picture

  I've seen trades like this many times over the years. There's not a rubberband big enough to contain the stored energy these(ponzi-levered) markets have.

 It's all about which direction the "breakout" occurs in. If the derivatives (hedged) market breaks first, then the spike will be higher as traders cover their short equity hedges.

 If the bond market breaks first, the move will be a huge move down in equity markets.

 Either way the $usd will surge higher, then fall like a rock. There's no saving grace this time. Any printing will result in massive inflation, and misallocation of resources.

  Starving people will lead to civil unrest, and lost profits for all businesses. The PTB, will go into self preservation mode, and I'll be using my pitchforks. ;-)

Thu, 05/07/2015 - 18:02 | 6070709 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Like I told everyone already, I appropriated Alan Greenspan's mojo, and every day I wake up and pray to God that the DOW goes down. If all I have to do is continue on for another 8 days to prove that I control the markets, NO problemO, done!

 

NOTE: Your love does not pay my bills, Wall Street, I want money, that's what I want. For $30 Trillion in physical gold bullion I will run the FEDERAL RESERVE better than Greedscum did it IMHO.

 

p.s. keep your eyes on the DOW, kiddies!

 

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