Quiet Market Finally Speaks Up

The streak is over. Last Friday, U.S. stocks ended their streak of trading within the narrow range. Prior to Friday’s decline of -2.5% (Source: Yahoo! Finance), the S&P 500 Index went 43 trading days without moving up or down 1% in a single trading day. Since 1990, there were only 12 other time periods where the S&P 500 traded within this narrow range for 30 days or more.

In the prior 12 narrow range periods, only one of them experienced a negative return and most of them posted moderate gains. Returns following these low volatility periods weren’t too troublesome, so moving from periods of low volatility to higher volatility shouldn’t be a concern on the surface. After periods of low volatility, one-month average returns were essentially flat and three-month average returns we up 1.7%.

While every streak starts and ends for different reasons, these rare occurrences don’t have much significance to investors past the media appeal.

The views and opinions contained herein are those of Bellatore Financial, Inc. and have been researched and analyzed by Jonathan Scheid, Chief Investment Officer, Bellatore Financial, Inc.

All Indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The NASDAQ Composite Index measures the performance of all issues listed in the NASDAQ Stock Market, except for rights, warrants, units, and convertible debentures. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Dow Jones is computed by summing the prices of the stocks of 30 large companies. The Morgan Stanley Capital International (MSCI) Europe, Australia and Far East (EAFE) Index is a broad-based index composed of non U.S. stocks traded on the major exchanges around the globe. The Wilshire 5000 Total Market Index represents the broadest index for the U.S. equity market, measuring the performance of all U.S. headquartered equity securities with readily available price data. Capital Allocation & Management is a managed money program offered through Bellatore Financial, Inc. 15.003.c.1.15