Author: Ken

Posted on

Volatility Update #3

As you know, I’ve been tracking three volatility-related record streaks in real-time with you. The first two streaks (1) number of consecutive days without a daily decline ended on January 29th, and (2) number of consecutive days without back-to-back 0.25% declines ended the following day.

Streak #3 was the number of consecutive days without a 5% correction. In Volatility Update #2 (January 30th), I mentioned that this streak would end before year-end, “and, maybe, even before the first quarter is over.”

Well, today, before the end of the first quarter, this streak finally met its end at a hair over 400 days. Continue reading “Volatility Update #3”

Posted on

Friday’s 666-point decline puts the Dow back at levels not seen since…

Friday’s 666-point decline puts the Dow back at levels not seen since…January 11, 2018!

*|Note the sarcasm|*

While a 666-point drop is extremely rare, although soon to become less rare, it’s merely a blip on a long-term chart. A 666-point decline represented about a 2.5% loss on Friday, which is far more common. A 600+ drop in the market has only happened eight other times while a 2.5%+ daily decline has happened 398 times (or about 1.8% of all trading days) since 1930. Continue reading “Friday’s 666-point decline puts the Dow back at levels not seen since…”

Posted on

Volatility Update #2

Yesterday, I mentioned the market’s longest streak without at least a 0.6% daily decline came to an end at 99 days. I titled that post “Volatility Update #1″ because I figured more would follow. Sure enough, record streak #2 has now ended just one day after the first.

The market, until today, was on an almost 200-day streak without any back-to-back declines of at least 0.25%. With the S&P 500 losing 0.67% yesterday and 1.09% today, we can now hang that record in the market hall of fame. The most recent streak lasted over 50% longer than the previous record set in the mid-1960s. Just like yesterday’s record, I believe this one may stand for many decades as well.

This leaves one more streak I’ve been writing about in tact…for now.

  • Longest streak in history without a 5% correction

When will this one come to an end? Look for Volatility Update #3 before year-end and, maybe, even before the first quarter is over.

 

 

Posted on

Volatility Update #1

I’m calling this “Volatility Update #1” as I’m assuming more records will end in the coming weeks and months.

I recently wrote how the S&P 500 was experiencing its longest streak in history without a 0.6% daily decline. Today, the S&P 500 lost 0.67% ending the streak at 99 days. I’m assuming it will be decades, if not longer, before that streak is broken again.

 

A couple of the volatility-related records still in tact:

  1. Longest streak without back-to-back declines of at least 0.25%.
  2. ​Longest streak without a 5% correction
Posted on

The Other Side of the Coin: Short-Term Indicators

Normally, when evaluating the markets I focus on valuations, but today I’m going to focus on shorter-term signals.

The reason I normally focus so heavily on valuation metrics is because they help inform investment strategy and rates of return assumed within clients’ financial plans. However, as I’ve stated ad nauseam over the last year, even the most reliable valuation metrics aren’t useful for predicting short-term returns. The reliability of valuations relates to subsequent 10-12 year market returns, which is why I thought I’d provide perspective from a different angle today.

Shorter-term price movements are mainly a psychological phenomenon driven by investor emotions and their inclination towards speculation or risk-avoidance regardless of underlying fundamentals. As you can probably guess, it is far more difficult to forecast short-term returns for this reason. Short-term movements are not necessarily grounded in fundamentals, which is why valuations can occasionally become extremely high (e.g. 1929, 2000, 2018) and extremely low (e.g. 1942, 1982).

Continue reading “The Other Side of the Coin: Short-Term Indicators”