The stock market has had a great ride.
Since the coronavirus crash of late March 2020, the three major U.S. indexes have jumped almost 100% or more — all reaching new highs.
It’s been one of the longest, uninterrupted rallies in the U.S. equity market in history, thanks to a retreat of the COVID-19 pandemic and the Federal Reserve easing its monetary policy. All that may be changing, however, and a stock market correction may be on the horizon.
In this episode of The Bull & The Bear, I’ll tell you how things are setting up for a market correction and what you should do about it.
Is a Market Correction Coming?
The last time the S&P 500 fell 5% or more was in late October 2020.
Since then, all three major U.S. indexes have jumped around 35%.
The S&P 500 rose 35.2% since November 2020, while the Nasdaq Composite jumped 35.2%, and the Dow Jones Industrial Average moved 32.5% in the same time.
It’s been more than 180 days since the S&P’s October 2020 drawdown.
According to Goldman Sachs Research, that is one of the 15 longest stretches in history that the market has not had a 5% correction. (The average time between 5% corrections since 1950 is only 97 days.)
That means we have doubled the average time between market drops.
Does it suggest another market correction is on the way? I’ll tell you how the data shapes that story and what you should do about it.
The Bull & The Bear
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Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.