On Friday, the S&P 500 marked 50 consecutive days without a 1% drop—something it hasn’t done for two years. The last time the index dropped 1% or more was a 1.2% drop on April 7; and incredibly, it has not dropped more than 1% on any day since. This is the longest such streak without a 1% drop since the 66-day streak in the summer of 2014. The longest streak since 1980 without a 1% drop was 112 in 1985, but 1995 did have two separate 100-day streaks.
With the Brexit drama everywhere, there could be a 1% drop at any time. Still, going back to 1995, three out of the past seven streaks ultimately made it up to near 100 days without a 1% drop. In other words, this streak of 50 days is quite long, but history would say it is possible it could go longer.
Over the past 50 days without a 1% drop, 3 of those days saw gains of more than 1%. The previous 14 times the S&P 500 went 50 days without a 1% loss, there was an average of 3.6 days with 1% gains during those 50 days. So, this is right in-line with the average. Over the recent streak, the S&P 500 has gained only 1.4%, which is the weakest performance during this kind of streak going back to 1980. The next closest was a 3.5% gain in late 1993/early 1994.
So, what happens after 50 days without a 1% drop? It looks like not much in the near term, as the median performance is flat two weeks later and only 0.1% one month later, with gains for both a coin flip. Going out 6 and 12 months, gains are more normal.
Reaching 50 consecutive days without a 1% drop is quite a rare achievement. At the same time, a 1.4% gain during those 50 days isn’t much to get excited about. That right there sums up the recent action, as things have been extremely frustrating to bulls and bears alike. For a rundown of our concerns and reasons to be optimistic, please be sure to read our just released Weekly Market Commentary.
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