Daily Traders Edge

Markets Continue To Rally, Here’s What’s Next… – MarketWatch

May 25
15:13 2016

CHAPEL HILL, N.C. (MarketWatch) — Some investors and pundits are commemorating the one-year anniversary of the May 2015 record high in U.S. stocks by noting that the market is only a couple percent below it.

Their implication is that the bull market is still alive, if not exactly well. But they are finding it increasingly difficult to adhere to this belief. Within one week, they will find it nearly impossible to do so.

That’s because there’s been only one bull market since 1900 that experienced a correction that lasted longer than a year. And, within one week, the length of even that bull market’s correction will be exceeded by the time elapsed since the May 2015 high.

Unless the stock market this week surges to new all-time highs, in other words, those in the bull-market-remains-alive camp will have to argue that the current bull market and correction is different than any other over the past 120 years.

I base these comments on an analysis of the 35 bull markets in a calendar maintained by Ned Davis Research. Focusing on the Dow Jones Industrial Average, I calculated the length of the longest correction within each of those bull markets (defined as the number of days it took for the market to surpass a previous high). The results are summarized in the accompanying chart.

On average, the longest corrections within those bull markets lasted 155 calendar days, or about five months. The longest of any one of those bull market corrections occurred during the bull market of the 1990s, and it lasted 379 days. By the first week of June, this length will be surpassed by the time elapsed since the May 2015 high.

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