This week’s losses mark the biggest losses on the S&P 500 since June of 2012, putting the S&P 500 YTD -3.1%. All indicators point to this week’s market activity being nothing more than a standard exhale versus the market correction that the media outlets and other Noise producers would like you to buy into.

Here’s the data:

NYSE Bullish Percent is at 64.39% and on DEFENSE. A Market “Correction” can be characterized as a decline of 10% or more. Some stats:

  • Since the end of World War II (1945), there have been 27 corrections of 10% or more, versus only 12 full-blown bear markets (with losses of 20% +).
  • This equals about one correction roughly every 20 months.
  • The average decline during these 27 episodes has been 13.3% and they’ve taken an average of 71 days to play out (just over three months).
  • Since the stock market’s bottom in March of 2009, there have been only 3 corrections: In the spring of 2010 the S&P 500 began a 69-day drop of roughly 16%. The widely referenced summer correction of 2011 lasted for about 154 days and almost became a bear market. The correction during the spring of 2012 set up one of the greatest rallies of all time, although it was barely a real correction, sporting a peak-to-trough drop of just 9.9% in just under 60 days.
  • The most recent correction took place in 2011, between the end of April into the end of September. The Dow dropped roughly 16%. The S&P 500 actually dropped a hair over 20% before snapping back, leading some to believe that this was a bear market – the implication being that the current bull market is just 2 years old and not five years old (dating from March of 2009). I have no strong opinion on that debate.
  • Bull market rallies in between corrections – and there have been 58 in the post-war period – tend to run for an average of 221 trading days before being interrupted and gaining an average of 32%.

While the NYSEBP is on Defense (this reversal happened back on 8/30–long ago–at 65.70% as a result of a 6% decline from the August reading of 72%), it still indicates that 64% of stocks are on a “Point and Figure BUY Signal.” This means that 64% of stocks are performing favorably and only 36% are not. This is a “tide” we don’t swim against.

This “soulless” barometer (thank you, AH Cohen ’54) helps guide us through days like these where the focus is primarily on the indexes and not the overall playing field–in an agnostic way. In a way that honors only data, not emotion.

In short, and in the spirit of Super Bowl season, while we don’t have possession of the football (remembering that we are on DEFENSE), we ARE winning the game. It would make no sense to “buy into” the media noise and change strategies now, when what are doing is working.

So, for now, we honor our rules and stay disciplined…NOT to be confused with Buying and Holding. Rest assured, if indicators follow suit with the markets and deteriorate, your portfolio will be adjusted, but not until the data and rules say so.

Be different–don’t let this “Exhale” affect you like it will most—know that your portfolio will honor it for what it is and take every opportunity it offers us!

If we, at Alphavest manage your 401k or other investments, know that we’ve got you managed. But as always, feel free to call or email us with your questions.

Liberate and Quiet the Noise,


P.S. Want to know more? Click here to email Cokie!