One for the S&P Bears…

I just read something interesting regarding the current outlook for the S&P. Keep in mind that no matter where we are in the market cycle, there are always extreme bears and extreme bulls. One must keep individual views or stats in the right perspective. However, these are some interesting numbers.

The 200 Day Moving Average is often used as a market barometer. You’ll read something like “XYZ has broken its 200-day average” or “so-and-so is above the 200-day average”.

With that in mind, it was interesting to read that since the 1930s there have been only four occasions when the S&P moved from more than 20 percent below the average to 20 percent above within one year. It happened twice in the 1930s, once in the 1970s and has happened now. All four were during bear markets – and a move lower followed.

The first three occurrences were followed by a weaker market 16 months later but a strong market one year later.

Take a look at the current chart.

S&P

At the March low, the market was about 36 percent below the average. As at the high a few days back, it is close to 20 percent above. This has happened all in the space of above six months. Interesting times lay ahead…