from my daily newsletter Markman Capital
Insight....
The S&P 500 is now up more
than 6% since its closing low of 1,278.04 on June 1st. If the index
can continue to rally without revisiting that closing low from June
1st, it will set a record for coming as close to a 10% correction
without actually reaching that level, according to research by
Bespoke Investment Group.
That begs an interesting question: How has the benchmark
index performed in the past after it fell more than 9%, but less
than 10%, in a "near miss" correction? Well it turns out that the
answer is really, really well.
In the table above, Bespoke highlights prior instances. In
the most recent decline the S&P 500 fell 9.94% from its closing
high on 4/2 to its closing low on 6/1. Prior to that, the closest
the index came to a correction without actually getting there was
in 1932 when the index fell 9.86%. Interestingly, the third largest
'quasi' correction came back in late 2011, when the S&P 500 saw
a 9.84% decline.
For each near-miss correction, the table shows in the last
column the performance of the S&P 500 (in percentage points)
during the rally that followed the decline. Of the ten prior
periods, the average S&P 500 gain in the following rally was
23.1%.
That suggests a quasi-correction tends to provide a pause
that refreshes. If the current instance were to hit that average
gain, the benchmark index would challenge for a new high at 1531! I
doubt the rebound will get that far, but this is a very compelling
study nonetheless.
Interesting statistics (Matt can you condense for me?) thanks.
Posted by morton13 on 21st of Jun 2012 at 09:16 am
AFTERMATH OF CLOSE CALLS
from my daily newsletter Markman Capital Insight....
The S&P 500 is now up more than 6% since its closing low of 1,278.04 on June 1st. If the index can continue to rally without revisiting that closing low from June 1st, it will set a record for coming as close to a 10% correction without actually reaching that level, according to research by Bespoke Investment Group.
That begs an interesting question: How has the benchmark index performed in the past after it fell more than 9%, but less than 10%, in a "near miss" correction? Well it turns out that the answer is really, really well.
In the table above, Bespoke highlights prior instances. In the most recent decline the S&P 500 fell 9.94% from its closing high on 4/2 to its closing low on 6/1. Prior to that, the closest the index came to a correction without actually getting there was in 1932 when the index fell 9.86%. Interestingly, the third largest 'quasi' correction came back in late 2011, when the S&P 500 saw a 9.84% decline.
For each near-miss correction, the table shows in the last column the performance of the S&P 500 (in percentage points) during the rally that followed the decline. Of the ten prior periods, the average S&P 500 gain in the following rally was 23.1%.
That suggests a quasi-correction tends to provide a pause that refreshes. If the current instance were to hit that average gain, the benchmark index would challenge for a new high at 1531! I doubt the rebound will get that far, but this is a very compelling study nonetheless.
what was the deepest pullback during those periods?
Posted by hazbin1 on 21st of Jun 2012 at 09:27 am