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Are Stocks Due For A Big Move?
With last month’s failed (so far) breakout in the U.S. equity market, stocks are relegated once again to range-bound status. Essentially the market has gone nowhere since the beginning of the year and, by some measures, 2015 has been the quietest start to a year in over a century. One characteristic of the stagnant action has been a lack of out-sized daily moves in the market, up or down. Specifically, as detailed in today’s Chart Of The Day, June 1, 2015 marked 111 days since the S&P 500 last had a 2% daily gain or loss. This is the index’s longest streak without a 2% day since the one that ended on June 1, 2012 at…111 days.
So what is the significance of this streak? Is the market “due” for a big up or down day? Well, since 1950, the median length of time in between 2% days is 42 days, or about exactly 2 months. The S&P 500 hasn’t even had a 2% day this year. Its last 2% day came on December 18th (the 2nd of 2 consecutive 2% up days). So in a way, yes, the market is due for a big move.
However, a market’s micro-environment tends to be more persistent than one may expect. That is, high volatility periods tend to persist and low volatility periods tend to persist. Yes, one extreme usually leads the other, but not always right away. For example, the S&P 500 once went 680 days, from October 2003 to June 2006 without a 2% day. On the flip side, the S&P 500 went almost the entire back half of 2011, from July 27 to January 5, 2012, where it never even experienced a double digit streak of days without a 2% move. Thus, we wouldn’t necessarily hold our breadth waiting for the environment to change, i.e., the next 2% day to occur.
As far as historical streaks go, here are some more facts and figures:
- Since 1950, there have been 40 other streaks of at least 100 days without a 2% move in the S&P 500.
- The median of those 40 streaks was 187 days.
- 19 of the streaks ended with a 2% up day; 21 ended with a 2% down day.
- 9 of the last 10 streaks ended with a 2% down day.
What is the takeaway? There likely is nothing predictive here. The major point is probably that the markets have been pretty dull, or at least lackluster, during the first half of 2015. As we mentioned, while the market is long “overdue” for a big move, these environments tend to persist. So the fact that the streak is a long one doesn’t imply that its end is imminent (although, certain patterns, e.g., wedges, among the indexes do not have much longer before they reach their apex, suggesting a breakout one way or another.)
In the end, this one may be just more a bit of trivia than anything else.
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Are Stocks Due For A Big Move?
Never before has a boy wanted more.
https://www.youtube.com/watch?v=sZrgxHvNNUc
How can we see the deer again without a 2% down day? We love the deer!
Is this a trick question?
Yes. Up.
They could do what the chinese did, automate the creation of hundreds of thousands of new investment accounts, and boom 5% increase in a day.
its a rising wedge on the daily, weekly and monthly. rising wedges are not bullish.
Trust me, since 2009 rising wedges have been super duper bullish shortsqueeze mania. Fell in that trap a few times, never more.
Are they moving because we didn't spend enough...and where are they moving to?
Inquiring minds want to know!
Another one has too much time to kill.
Get me some coffee instead will ya.
Wall of woarry .... Loess is moar !
Rigged.
This is about as important as what color underwear Christy Jenner wears
And then there's 3%. My favorite is 7%. All the others just make me dizzy when I think about them.
Exactly. Plus can't compare anything pre-2008 to post-2008. We're in La La Land now, and all that matters is whether Yellen says this or that or whatever. SP500 stalled out at same time that QE ended, big surprise. Regression from 2008 to 2014 on Fed B/S said SP500 wouls stall out here so...what now?
maintain the status quo through covert and outright manipulation, period. Japan 2.0.
Unfortunately, the calories required to maintain a decent standard of living for 7+ billion people (and growing) is what it is... ..eventually, the middle will not hold and the world will go to war in earnest... ...again.
same as it ever was.
I guess stocks don't need a big move as long as they continually grind higher.
NFLX will ramp up.
What a fucking tool. What is the takeaway? The is no market for true price discover you stupid fuck.
Silk road was a mechanism for a truly free market and it's founder was just sentenced to life in prison.
That should tell everyone everything they need to know about the "official markets".
It won't happen as long as everyone is expecting "it" to happen.....
No.
Least useful piece I've ever read on ZeroHedge.
Why even be in the market with this sideways movement. I am already 50% into cash and may go the entire 100%. Not going to miss out on any gains.
skip
Really? What drivel. By now everyone gets that the 'New Normal' is here to stay. Full support for the markets by the central bankers means fundamentals don’t really matter. Bad news just means more intervention is coming, etc, etc. Too big to fail. There are NINETY-FIVE MILLION Americans in the markets. Does any bear here really believe they will let the markets plunge? Our cities would burn. The wealthy would quickly leave the country with their gold. Chaos would ensue.
This is how is from now on. It all fell apart 7 years ago and now this is what is left. More and more debt is the only way to prevent a collapse. People must keep borrowing and buying stuff and deficit spending can never be curtailed.
It can still fall apart without WWIII starting, but they will not give up without a fight. If tech fails and the Silicon Valley mega-bubble pops, nothing will stop the decline. Do you have deep pockets?
Yes the move has started.................up upand away!
Quick, get the S&P some Metamucil
Short answer... Yes.
http://www.globaldeflationnews.com/sp-500-indexelliott-wave-update-for-w...