American stocks write history - January 31, 2018

American stocks write history

US stocks are writing history this year again. The S&P 500 has had a historical period: more than 406 trading days went by without a fall higher than 5%. This is the highest count ever in the history of the index. It took more than 10 years to beat the last record.

S&P 500 broke its former record on 17 January this year, when it went on for 395 days without a fall bigger than 5%. But the stock hasn’t stopped ever since then, and went on for longer. This is a rather rare thing to happen, a period almost this long was last seen between 1994 and 1996.

As we can see in the table above, there are not many occasions when S&P 500 went on for such a long time without an over 5% correction. But there is an even more important fact there: this was not only the longest run but had the highest gain ever.

Last year, we’ve seen other records like this were broken. That time, the longest periods without a 1% fall were overtaken. As we wrote about it in March last year „S&P 500 and Dow Jones didn’t have a day with a bigger fall than 1% for 109 days. This is such a rare phenomenon that it hasn’t happened in decades.” The last time Dow Jones was seen that strong every single day was in the 1960s.

It was also interesting to see that nothing could stop stocks: no FED rate hikes and no presidential election. The same is true now: since then, several FED hikes have happened, and Donald Trumps have had serious difficulties, but still: S&P 500 goes higher and higher without a serious plunge.

Although stocks perform really well and we’ve seen bullish markets for a while now, we – and many other analysts – expect a correction this year. This, however, shouldn’t be something to be scared of, but a rather good chance to start investing.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.