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Mr. Market Has Reverted Back to a Calm State

On Tuesday, The Wall Street Journal observed in its morning briefing that “The S&P 500 has gone 53 trading days without a move of 1% in either direction, the longest such streak since January.” As of today’s close, the streak now stands at 56 days. This is just the fifth time in five years that the large-cap index has posted a gain or decline of less than 1% over a span of at least 50 consecutive market days, the newspaper stated.chart

The calm waters are quite a change from what we experienced at the start of the year. During February and March alone, the S&P 500 index closed down by at least 1% on 11 different days and rose by at least 1% 12 times. Including January and the first few days of April, the S&P 500 experienced a total of 25 days where it moved up or down by at least 1%. The volatility included six days with a drop of at least 2% and one day with a gain of at least 2%.

Fast forward to today, and the updated 2018 year-to-date count is 16 days with a drop of at least 1% and 20 days with a gain of at least 1%. Put another way, since April 3, there have only been 11 days when the S&P 500 has closed up or down by more than 1%. The last such day was June 25 when the large-cap index fell by 1.37%.

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AAII Sentiment Survey

Optimism fell to a six-week low, ending a streak of above-average readings by doing so. More about this week’s results.

This week’s results:
  • Bullish: 32.1%, down 10.1 points
  • Neutral: 35.1%, up 3.6 points
  • Bearish: 32.8%, up 6.5 points
Historical averages:
  • Bullish: 38.5%
  • Neutral: 31.0%
  • Bearish: 30.5%

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The Week Ahead

Nine members of the S&P 500 will report earnings including FedEx Corp. (FDX) and Oracle Corp. (ORCL) on Monday and Micron Technology Inc. (MU) on Thursday.

The week’s first economic report will be the September Empire State Manufacturing Survey, released on Monday. Tuesday will feature the National Association of Home Builders’ September housing market index. August housing starts and building permits will be released on Wednesday. Thursday will feature the September Philadelphia Fed’s business outlook survey and August existing home sales.

The Treasury Department will auction off $11 billion in 10-year Treasury-inflation protected securities (TIPS) on Thursday.


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