With the recent performance of the S&P, in which there has not been even a single 1% drawdown since the election, not only is complacency raging but some traders have forgotten what it even means to experience a modest 5% correction, let alone a 20% bear market. How much longer can this go on?
For the answer, we turned to a recent report by InvesTech, according to which as the table below shows, a 5% correction has occurred about once every seven months in an ongoing bull market.
Ignoring that the current bull market is already more than twice the average length of past bull markets with no 20% correction since the financial crisis, the frequency of corrections has been roughly in line with historical norms.
Until recently. As the next chart shows, we are now 11.2 months removed from the bottom of the last correction. Which, to InvesTech means "