Ever since last February’s “Dimon Bottom” where JP Morgan CEO Jamie Dimon’s purchase of stock in his bank has come to symbolize the low of the late 2015/early 2016 market sell-off, US equities have been on a practically uninterrupted run higher.  While there have been bumps along the way, the S&P 500 hasn’t seen a 10% correction at any time in the last 16 months, rallying more than 33%.  With the current rally lasting 477 calendar days, it ranks as the eleventh longest run in the S&P 500 without a 10% correction since 1928.  In the table below, we list each of the ten longest rallies without a correction as well as how much the S&P 500 declined in the following correction.

If the current rally is going to crack the top ten, it has a lot of work to do on the upside.  At 477 days, the S&P 500 would need to go another 173 days before reaching a short-term peak.  That would take the current run past Thanksgiving!  Another thing to note is that just as the ten prior rallies lasted much longer, they were also considerably stronger.  In fact, the average and median gain during the ten prior rallies that went longer without a correction was more than 90%!  Looking ahead, you would think that the harder they run, the harder they fall.  In actuality, though, the average decline in the correction that followed the ten prior rallies was a decline of 15.7% over 142 days.  Compared to all corrections since 1928 where the average decline was 19.5%, these corrections may have lasted longer but their intensity was not as strong.

Finally, how overdue are we for a correction?  Since 1928, there have been 95 10%+ corrections for the S&P 500.  While corrections tend to come at irregular intervals, that works out to about one every eleven months.  That would make the S&P 500 currently about six months overdue for a correction.

No, there’s no need to go restarting your machine or thinking your phone screen in broken, the Financials really are up over 1% today, and the S&P 500 Financial sector is having its best day since late April.  What’s rather encouraging about today’s move for the Financials is that the downtrend that has been in place for the sector since the highs earlier this year appears to have been broken.  Now if you’re screen is also showing green next to any Energy sector names, we would advise making an appointment at the genius bar!

In terms of stocks driving today’s move in the Financial sector, some of the biggest winners today have been the biggest losers since the sector peaked on 3/1.  The top part of the table below shows stocks in the sector that were down more than 5% between 3/1 and yesterday but are up 3%+ today.  The biggest winners are all banks with Regions (RF) and Citizens Financial (CFG) both up over 3.9%.  The only major brokerage firm to make the list is Morgan Stanley (MS) which has erased a good portion of it 7.5% decline with a 3.1% gain today.  On the downside, just three stocks in the Financial sector are down today and they are all stocks that were up from 3/1 through 6/7.  More broadly, of the 17 stocks in the Financial sector that were up from 3/1 through 6/7, the average gain today is just 0.77%.  Conversely, of the 48 stocks that were down from 3/1 through 6/7, the average gain today is over 2%.