Uninterrupted Declines

July 10, 2008

Hickey and Walters (Bespoke) submit:

If you’ve forgotten what a rally feels like, you’re probably not alone. The S&P 500 hasn’t had a 2% gain (in one day or over multiple days) since early June. In the top chart below, we show all periods where the S&P 500 went more than thirty days without a 2% rally. As shown in the chart, these uninterrupted declines are not too uncommon, as there have been 41 other periods since 1940. What makes this period more painful, however, is the magnitude of the declines during this stretch. Since June 5th, the S&P 500 has declined by 11.4% without a 2% rally in between (lower chart), which makes this the sharpest uninterrupted decline since February 2003. The drought of rallies, compounded by the fact that any rally is more than erased the next day, make this one #%$& of a market.