Anyone who has ever attempted to make money trading has learned the lesson all too quickly that timing is everything.  Some of the world’s greatest investors have lost nearly everything because their timing of the market was just slightly off.  Without getting into individual names, we saw this among some of the greatest value investors in the late 1990s when they bet against internet stocks only to throw in the towel just before the peak, and then more recently in 2011 when some big-name investors went long European sovereign debt only to cover just before yields peaked leading to one of the biggest bond market rallies of our lifetimes.  In both cases, the thesis was spot on, but because they were just a little too early, they ended up with nothing (literally in some cases) to show for it.

While the recent performance of biotech stocks hasn’t exactly been monumental, it does provide another example of the importance of timing and the market.  With a gain of over 15% in the biotech ETF (IBB) since mid-June, just about any trader will tell you that it’s been a good few months for the group.  However, looking at how that performance has been distributed over the last four months, all of the gains have come over the course of just nine trading days.  The first leg of the rally came in mid-June when IBB surged 9% in four trading days.  For the next two months, IBB did nothing until late August when another four-day rally pushed the ETF higher by 6%.  Then from the start of September through yesterday, IBB did nothing until rallying modestly today.  So yes, the last four months have been a very good time to be long the biotech group, but if you were late getting in, or tried to time the moves by getting in and out, there’s a good chance you’ve missed out on most of the move.

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What happens when a company entrusted with the personal information of US consumers gets hacked and exposes the names, addresses, Social Security numbers, birth dates, and even drivers license numbers of just about every American who has a credit report?  Well, for starters, your stock price goes down, and that’s exactly what happened to the price of Equifax after news of the massive security breach first broke in early September.  From the close on 9/7 to its intraday low on 9/14, shares of EFX plunged more than 37%.

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While they have recovered a bit of that decline in the last month, short-sellers have been piling into the stock, sending its short interest as a percentage of float up to just under 6%.  While 6% may not sound like a lot when there are other stocks that have more than half of their float sold short, with its historically stable business, EFX is not the type of stock that typically attracts short-sellers.  For EFX, 6% short interest is a extremely high.  Looking back over the last decade, short interest levels for EFX have never been as high as they are now after the security breach.  Not even during the financial crisis.  One could easily argue that for Equifax at least, the latest security breach is a much more negative event than the financial crisis, so the high level of short interest may very well be warranted.  The company is far from out of the woods.  What the high short interest level does provide, though, is some degree of cushion against further weakness.  With the stock already down over 25% and 6% of its outstanding shares sold short, eventually, those shares will have to be covered.

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The thousand point thresholds continue to drop like flies these days.  With the caveat that a thousand points becomes an increasingly small percentage of the overall index as prices rise, the DJIA just crossed its fifth 1,000 point threshold since Trump’s election last November.  The table below shows the date that the DJIA has first crossed each 1,000 point threshold on a closing basis since it first closed above 1,000 back on 11/14/72. For each 1,000-point threshold, we also show how many days transpired between that cross and the prior 1,000 point threshold, the percentage that each 1,000-point threshold represents of the index’s price, and then how many upside and downside crosses the DJIA has had with each level.

Since the election, the DJIA has crossed five 1,000-point thresholds, and with each one, there has been very little in the way of looking back.  For instance, once the DJIA crossed 19,000, it never closed back below that level.  Once 20,000 was crossed, it only closed below it again once, while 21,000 only saw two subsequent closes below.  In looking for comparable periods, the current period is somewhat similar to the late 1990s, when the DJIA crossed several 1,000-point thresholds in very short order.  In the current period, these levels have been coming and going a lot faster, but again, it’s important to remember that they represent a much smaller percentage of the overall index’s value than the levels that were crossed in the 1990s.  Finally, while it may seem as though the move from 22K to 23K was quick, at 76 calendar days (if that level holds between now and the closing bell), it was longer than the time that elapsed between 20K and 21K (35 days) as well as the time it took to get from 19K to 20K (64 days).

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