Pragmatic Capitalism

Practical Views on Money & Finance

The Trend is Your Friend…

Some people say, “the trend is your friend…until it bends” (assuming this one ever does bend!)….Along those lines, here’s some interesting data via InvesTech Research:

“Although the S&P 500 moved upward in 10 of the past 11 weeks, this doesn’t necessarily mean the market will decline in the coming months. In fact, historical evidence points toward further gains ahead. Over the past 85 years, there have been only 23 instances when the S&P 500 has had a similar winning streak. While it is unusual for the market to be up in 10 of 11 weeks, it is not necessarily a sign of imminent trouble ahead.
• The S&P 500 moved sideways roughly half the time during the first month following. By the end of 3 months, there was a median gain of 4.9%, with only 2 periods that saw more than a 4% decline.
• Six and 12 months later, median gains picked up to 7.0% and 12.6%, respectively. There were only 2 instances when the market was down more than 5% (1957 and 1989) and both occurred when there was significant tightening of Federal Reserve policy during the preceding 18 to 24 months.
• Only once, in 1957, have we seen this type of market action in the midst of a bear market.
• Additionally, each of the instances occurred during periods of economic growth – except for 1961, when the economy was climbing out of the tail end of a recession.”
Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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