The market has reached a point where the word “correction” has seemingly lost all meaning — because the most marginal of declines is referred to as such. Bianco Research points out that the S&P 500 (SPY) has not declined by 2% since July 13 — the second longest-period without a 2% correction since 1964. “Only the 1995 period saw a longer string of days without a 2% correction,” they write, noting that a 2% decline really isn’t a correction in the first place, just noise.Prior to Tuesday's light volume holiday rally, in December, the SPX had sagged about 1.14%.
Jim Bianco observes:
As the table [below] shows, the S&P 500 has not declined 2% since July 13 (currently we are seeing the third decline of more than 1% during this period). This string of 162 (actual) days is the second longest period of no 2% correction since 1964. Only the 1995 period saw a longer string of days without a 2% correction.
A further interesting observation via Bill King: The current rally is the weakest one in the table. Let's consider the context of each 7 rallies: The 1928 rally saw its first 2% correction late in a 10 year Bull move, coming 10 months before the peak; The rallies in the '50s and '60s (1953, '58, '61 and '64) were in the middle of the post WWII secular bull market; The 1994-95 move was also mid-secular Bull run, also benefiting from the 1995 soft landing.
How aberrational is the present run compared with these prior moves? With only 7 examples, the sample is too small to draw reliable conclusions. But it does raise some very interesting questions:
-Is this long non-corrective phase signaling a 1995-type soft landing? or
-Are we in the middle of a secular bull market, after only 3 years of a secular Bear market (2000-03)? or
-If this is the weakest such rally, might it have further to run? or
-Is this rally (called unnatural by some) truly unusual?
I am unsure of the answers -- but this data certainly raises some very interesting and curious questions . . .