The S&P 500 has experienced five consecutive days of moves exceeding +1% or -1%.
Here’s the chart:
Let's break down what the chart shows:
The blue line in the top panel is the S&P 500 index price.
The black line in the middle panel indicates consecutive days when the S&P 500 experienced a daily movement of +1% or -1%.
The red line in the bottom panel is the S&P 500’s 52-week drawdown.
The vertical gray lines indicate consecutive days when the S&P 500 experienced a daily movement of +1% or -1% is greater than 5.
The Takeaway: We have experienced five consecutive days of 1% movements, either up or down, in the S&P 500. This marks the longest period of market volatility since August of last year.
During this current period of volatility, we have seen a consistent trend of more stocks reaching new lows than new highs, alongside a significant rise in bearish market sentiment.
As shown in the chart, these volatile periods cluster together.
This behavior is typically bearish.
The data indicates that bulls prefer quiet conditions, while bears thrive in noisy environments.
Currently, it’s quite noisy!
Since 1998, there have been 41 instances where the S&P 500 experienced five or more consecutive days of daily movements of either +1% or -1%. On average, these periods lasted about 6.3 consecutive days and were associated with an average drawdown of -18.9% in the S&P 500.
Do you like noisy markets? Or do you rather it quiet?
Grant Hawkridge | Chief Aussie Operator, All Star Charts
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