Market Direction Mid Week Update©

Market Direction: BULLISH alert issued 11/10/2016 

Buoyancy. That is what this indefatigable equity market has come to be known for over a four-month stretch that remarkably hasn’t produced a decline of at least 1% for either for the S&P 500 or the Dow Jones Industrial Average. That is 106 trading sessions dating back to Oct. 11.

Put another way, Wall Street investors have gone through Halloween, a stunning election victory, weeks of shock, Veterans Day, Thanksgiving, Christmas, Hanukkah, New Years, Martin Luther King Jr. Day, Valentine’s Day, Presidents Day, four ballistic-missile firings by North Korea a tumble in oil prices, with nary a 1% blip neither from the S&P 500 SPX, +0.84% nor the Dow industrials DJIA, +0.54%

Such a preternatural period of supernatant trade is bordering on insane, but it is also historic, matching the longest stretch of trading days without a 1% decline since Dec. 18, 1995 for the S&P 500 and the longest since Sept. 20, 1993, for the Dow, according to Dow Jones data (see tables below ranking the 15 longest such streaks for the Dow and S&P 500):

Dow Jones Industrial Average
Streak Ending	1% decline	Days
March 1, 1966	-1.44	155
April 18, 1944	-1.23	132
June 4, 1964	-1.15	132
June 14, 1950	-1.38	125
Sept. 20, 1993	-1.04	117
March 8, 1945	-1.65	110
March 15, 2017	?	106
Nov. 21,1963	-1.27	103
Nov. 27, 2006	-1.29	95
Aug. 18, 1952	-1.10	93
Oct. 16, 1967	-1.05	93
Aug. 4, 1911	-1.72	91
Oct. 7, 1941	-1.12	91
June 15, 1909	-1.67	90
June 19, 1957	-1.06	89

S&P 500 Index
Streak ending	1% decline	Days
Nov. 21, 1963	-1.30	185
March 1, 1966	-1.27	155
June 8, 1954	-2.24	143
June 4, 1964	-1.03	132
March 24, 1961	-2.08	124
June 5, 1950	-1.01	118
July 29,1957	-1.09	116
May 18,1995	-1.42	111
Dec. 18,1995	-1.55	106
March 15, 2017	-?	106
Nov. 1, 1967	-1.27	105
May 14, 1958	-1.15	103
Nov. 3, 1993	-1.16	96
Nov. 27, 2006	-1.36	95
March 8, 1945	-1.81	93

Stock-equity benchmarks tend to decline at least once every six trading sessions, according to Salil Mehta, a graduate school finance professor, who has worked at Georgetown University and New York University.

So far, the market looks amazingly resilient. Shaking off geopolitical tensions with aplomb and offering only a muted nod to worries around oil futures which have recently resulted in an 11% decline in West Texas Intermediate crude-oil prices CLJ7, +0.47% in March.

What’s kept the market in check and the CBOE Volatility Index VIX, -5.45% known as the “fear gauge”, below its historic average of 20? It’s hard to say. Is it President Donald Trump’s promises to unleash animal spirits by way of tax cuts, deregulation and infrastructure spending? Maybe.

Check out: Why is market volatility so low when uncertainty is so high?

Lance Roberts, chief investment strategist at Clarity Financial, LLC has a theory. He says part of the market’s bounciness may be the result of a combination of hope of better growth and central bankers’ ultraloose monetary policy. In essence, the belief that there are measures afloat to boost economic growth and a mandate by the Federal Reserve and others to step in if the situation gets dicey.

“With the central banks, there’s a belief that every dip is a buying opportunity. That the Fed has got my back no matter what happens,” Roberts said.

Maybe as hedge-fund luminary and Appaloosa Management head, David Tepper, put it “you can’t be short in that kinda set up.”

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The all-time highs since our initial recommendation to go LONG this market. Here is how the markets have performed:

Stock Market Direction Recommendation (11/10/2016)
Dow	up 2,361.23 points a 12.55% gain	3/1/17
Nasdaq	up 702.99 points a 13.50% gain	3/1/17
S&P 500	up 233.50 points a 10.77% gain	3/1/17

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