Waiting For A Correction?

One interesting aspect of this bull market run for the S&P 500 Index has been the absence of a 10+% correction.

From The Blog of HORAN Capital Advisors

It seems on a daily basis the talking pundits on business news channels and in print are certain an equity market correction is just around the corner. For those investors under invested in equities, a correction would certainly be a welcomed event. Market corrections, however, are hard (if not impossible) to predict and when they do occur, they tend to surprise investors. As the below chart of market advances without a 10% correction shows, it is not uncommon for the market to move higher without significant pullbacks.

From The Blog of HORAN Capital Advisors

Source: Bramesh Tech Analysis

As noted in the Bramesh article,

• from March 2003 to October 2007 (the entire length of the last bull market), the index went 1,153 trading days without experiencing a 10% correction.

• the longest streak on record without a 10% correction was from October 1990 to October 1997, and that lasted 1,767 trading days.

• if the current streak matched the 1990 to 1997 streak, this bull market would run to October 1, 2018, nearly five years from now.

The other factor that seems to be preventing a so called market "melt up" is investor sentiment has not become overly bullish. In the sentiment survey release by the American Association of Individual Investors earlier this week, bullish sentiment actually feel 4.8 points after falling 4.3 points in the prior week. Investors should keep in mind though, sentiment indicators are most predictive at their extremes.

From The Blog of HORAN Capital Advisors

Source: AAII