While the Standard & Poor's 500 Index has now gone 515 trading days without a 10 percent correction, dating back to Oct. 3, 2011, that doesn't mean such a pullback is now imminent, says Jon Markman, founder of Markman Capital Insight, an investment research service.
"There has been a lot of concern that stocks have gone too far lately without a 10 percent correction," he writes on
Yahoo.
"The fear is that, if the market goes on too long without losing at least a tenth of its value off a high, any pullbacks to come in the future will be a lot more dramatic."
Editor’s Note: 5 Reasons Stocks Will Collapse . . .
But research by Bespoke Investment Group shows that while the current 515-day streak is well above average, there have been two periods over the last 25 years that lasted more than twice as long, Markman says.
To match the 1990-97 record, the current streak would have to last until Oct. 1, 2018.
For now, Markman sees positive signs for stocks. "As long as a low-growth environment also features low inflation and an accommodative monetary policy, the price/earnings multiples of successful companies can rise a lot higher than most people think."
Much of the market's current focus centers on third-quarter earnings. "We are right at the heart of earnings season so everything at this point of time is very earnings driven," Mark Spellman, a portfolio manager at Value Line Funds, told
Bloomberg.
"Earnings have been as good if not slightly better than expected. We've done a lot on the cost side. What people want to see is continued progress in the sales line."
Editor’s Note: 5 Reasons Stocks Will Collapse . . .
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