The S&P 500 opened lower this morning, so since we don’t seem to get these opportunities much anymore, we wanted to highlight just how benign the US equity market has been in recent weeks. While downside gaps aren’t uncommon, using SPY as a proxy, the S&P 500 has now gone 31 trading days without a downside gap of 0.50% or more at the open. For perspective, it has now been over a year since the S&P 500 had a longer stretch of time without at least one downside gap of 0.50%. To find a longer streak, you would have to go back to October 2018 when the S&P 500 went 47 trading days without a 0.50% decline and before that January 2018 when there was a streak of 53 trading days without a 0.50% decline.
If you’ve been paying attention, the dates 10/22/18 and 1/29/18 likely stir up bad memories if you are a bull. From the close on 10/22/18, the S&P 500 went on to decline 15%, while in the weeks that followed the end of the 1/29/18 streak, the S&P 500 dropped 10%. Before you start heading for the hills, though, we would also note that there were a number of similarly long streaks following the election in 2016 and throughout 2017 that were just as long or longer and when those streaks came to an end, there was little negative impact on the equity market’s performance going forward. Sign up for Bespoke’s “2020” special and get our upcoming Bespoke Report 2020 Market Outlook and Investor Toolkit.