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S&P 500’s Winning Streak Tops 1,370 Days

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“It’s Been a Long, Long Time” is a 1945 hit song and pop standard written by Jule Styne and Sammy Cahn.

Although the song was written from the perspective of a person welcoming home a beloved soulmate from World War II, the song’s lyrics are especially apropos when considering how long it’s been since the S&P 500 has had a 10% correction. 

Going back to 1949, there have been 10 bear markets and 11 bull markets, including the current bull. The previous 10 bull markets had an average duration of 1,770 calendar days and produced gains of 161.4%.

Through the July 2 market close, it’s been 1,372 days since the S&P 500’s last 10% correction. How long has it been? The S&P’s most recent correction to experience at least a 10% selloff was the five-month period from April 29, 2011, to Oct. 3, 2011. During that time frame, the S&P 500 sank 19.4%.

Although the current winning streak for the S&P 500 is most certainly extended, it is still not the longest period that stocks have gone without a 10% correction.

From October 1990 until October 1997, the S&P 500 went 2,553 very long calendar days without experiencing a 10% correction. That’s the record. The second-longest winning streak happened during the bull market that ended in 2007 when the S&P 500 went 1,673 days without correcting.

Historically, the average number of days between market corrections has been 514 days. The S&P 500’s current streak of 1,372 days is almost triple the average number of days between past market corrections.

Is This Time Different?

What’s different about this current stock market cycle compared to previous ones? The clear answer is loose and invasive monetary policies by the Federal Reserve which has contributed to rising equity prices.  

Since November 2008 when the Fed began its first round of quantitative easing, the S&P 500 (SPY) has soared 190%, U.S. small cap stocks inside the Russell 2000 (IWM) are up 232% compared to a gain of just 47% for long-term U.S. Treasuries (TLT).   

I know of at least one market analyst who has publicly stated he refuses to shave his beard until the S&P 500 experiences at least a 10% correction. The good news is that he’s saving money on razors. The bad news is that he’s already beginning to resemble Chewbacca.

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Ron DeLegge is the founder and chief portfolio strategist at ETFguide.