Since 1962, the S&P has only once before closed down six consecutive weeks above its 200-day moving average (it occurred in January 1969). Last Friday made it twice. When it did occur over 42 years ago, the market rallied strongly the next week and month.

 

I’ve looked at a number of indicators over the weekend, including the 6-week price decline and, adding everything together, I see nothing out of the ordinary. This has simply been a 7% pullback coming off of three-year highs made at the end of April. Whether it pulls back further is unknown but, as I’ve mentioned a few times, volatility and fear still remain fairly low. Such complacency is a concern, but all in all the market is due for a good bounce, especially if we get one sharp down day (that’s where the real fear will come in).