April 6, 2020 01:37 AM RSS

The Math Says At a Minimum We Are Looking At a Pullback Sooner Than Later

  • Wall Street Rebel | Geoff Garbacz
  • 03/14/2019 5:48 PM
The Math Says At a Minimum We Are Looking At a Pullback Sooner Than Later
Since the fourth quarter of 2012 I have been tracking all up and down moves on the S&P 500. There have been 36 up and 35 down moves since that period.

Of these moves, the average up move is 7.50% and takes 44 trading days to run its course. The average down move is -5.28% and lasts about half the time of the up move, 21 days.

The current move since the December 24th closing low is now 19.45% or 457.38 S&P 500 points. There have been five other up moves out of the 36 that ran more than 10%. The returns were 11.59%, 11.37%, 12.12%, 14.94% and 18,.44%.

After these greater than 10% moves, the down moves were -5.76%, -4.95%, -4.11%, -2.97% and -10.16%. So the smallest draw down was -2.97% with the biggest draw down at -10.16%. 

The average drop was -5.59%. The median was -4.95%. So those are the stats and here is the bottom line.

Corrections happen. This has been a great move. A pullback of -5% seems to be par for the course. If you are expecting another +10% upside without a pullback, then you are playing a fool's game.

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