The S&P 500 Index gained 0.7% last week, halting a two-week losing streak. But under the surface something very rare happened: it was the 50th consecutive week that the index hasn’t posted a weekly decline of at least 2%. We’ve noted many times over the past few months how historically rare 2017 has been regarding its lack of volatility, and this is yet another way to show it.
Per Ryan Detrick, Senior Market Strategist, “Bull markets tend to advance amid calm trends and turn more volatile near tops, while volatility usually takes full grip during bear markets. We expect more volatility to start soon, but tranquility has reached historic proportions, so we’d view an increase in volatility as perfectly normal; by no means are we seeing reasons to think this bull market is over.”
How meaningful is a streak of 50 consecutive weeks without a 2% drop? Well, for starters, this is only the sixth time in history it has happened. Also, the 14.8% gain over the past 50 weeks is the weakest advance over that stretch compared with the other five periods. Still, it’s what happens next that gets our attention. During all five instances, the S&P 500 was higher six months after with an average gain of 9.5%, while a year later it was also higher on every occasion with an impressive 19.8% average gain.
As discussed in our latest Weekly Economic Commentary, we believe the chances of a recession starting soon are slim. This study further supports the notion that long periods without volatility amid a bull market do not mean it’s almost over, and we don’t think a peak in this cycle is on the horizon. At the same time, it won’t be an easy ride; we expect volatility to increase over the coming months.