THE ODDS OF A DEEPER PULLBACK…
Here’s some pretty good historical data via Raymond James and Market Montage on the odds of a deeper market decline:
“Some interesting data from Jeff Saut of Raymond James if you are a data hound like I am.
Since 1928 there have been 294 pullbacks of at least 5%. Ninety four of them have been moderate (>10%), 43 have been severe (>15%) and 25 have been bear markets (>20%).
So in a statistical sense once you hit the 5% threshold your chances of a 10%, 15%, and 20%+ drop are as follows:
10%: 32.0%
15%: 14.6%
20%+: 8.5%”
Normally I’d say it’s unwise to data mine market facts like this and extrapolate out, but 294 data points is pretty broad as far as these kinds of statistics go…..
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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These stats don’t mean jack if the ECB pulls the plug on this thing.
You literally could have published the same thing in August 2008.
It is interesting that Jeff Saut picks 1928 as the year to start his data. Maybe that is the Freudian hidden message: that 2012 is similar to 1928??
This message, if any, would be subliminal. Doesn’t have anything to do with Freud. Just sayin…
Going back to 1928, or 1898 even, does not mean that much because only the vanity of mankind could suggest that short tenure of time historical. As Ed Seykota remarked once, markets and the statistics mentioned about them are in their infancy.
I agree with most of the above: that is such junk statistics. What’s happening to the rigor of this website?
Haven’t we already had a 10% pullback – albeit so far short-lived? In which case, it should be, given that, what are the odds for 15 and 20% (not that these necessarily mean much of anything).
from the figures given, looks like the odds should be:
15% 45.7%
20%+ 26.6%
The way it works for us is I go through my morning Research from my team(s).
Then see if there is anything I should be doing in terms of the short/Int./Larger picture.
So..back on Monday I recieved data to prepare for a counter trend rally back up to test the underside of 1363. Reading into the details..the SPX forward from the near triggers were excitingly positive out.all the way from 1 month-1 year. The data is robust. I’ve got everything at my figertips. It’s worked for many years. BUT the climax of our work was the downward move into 800-900 by Q1 2013.
Thus I could give you similar Saut data.(and heck why not..rather than say just trust me)..I’ll give you Bull vs. Bear.
3 Days up from 100 Day Low since 1982(SPX) The SPX closed higher one month after rallying 3 straight days off a 100 day low 18 out of 23 times. 1 month SPX up 3.5% 3 months up 5.8%
Now the flip side is Widening Credit Spreads. BAA at 1 yr. high and First time in 1 month since 1998 1 year -7.63%…1 month -1.23% on the SPX.
Like Vinny from Sham wow I could do this all day. When it’s all said and done..even with the note my team said to look for a move back up..I CHOSE to stay away. So..I’m flexible..but we have too many negative signposts to dick around. We will wait this out. We have not altered our hightened stance here. More we have positioned to take advantage of it. I AM ALWAYS WRONG. But should the market start to heal itself and new skin grows over the burns we will simply do what our job is. Change course. But as of today..we go into next week hunkered down for the continuation of a decline.
In order to make money Today with Central Bankers doing one hell of a job keeping this boat afloat. I am amazed how our set ups are so good Central Bankers come out with Rumors and full court spin right at the point we have the market tanking. You have to treat the market like Nordstroms. If you buy something you don’t like…just walk in when ever you want and get your money back. NO QUESTIONS ASKED. Don’t worry about the time you spent trying it on..or how you thought it would make you look. Just give it back and get something that suits your needs better. If the momentum which is going down turns up…I will return my bunker filled with bonds for a porsche with a stripper named Honey Badger.
Given the market’s dislike of uncertainty I find it hard to see the market rallying strongly into the Greek elections, especially seeing as polls are now over and done with.
I also find it hard to see Spain being handed billions in aid a week before the whole thing could potentially go down the sink.
I think they’ll find reasons to keep Spain at bay until the Greek situation is clearer……..which leaves us with a very interesting week ahead.
I’d done really well to pick up much of the downdraught on the short side but have blown half of it being chopped to pieces the last week or two……more work required to deal with the way the market is moved around these days.
The Correction Is Almost Finished: http://modeltstocktrends.blogspot.com/2012/05/stock-market-will-fall-in-february-2014.html
Have just read about the goldmine bubble that caught Benjamin Disraeli in 1825. Yes, they called it a ‘Bubble’ way back then.
A. Gary Shilling sees a S&P of 800.
http://jugglingdynamite.com/2012/06/06/gary-shilling-on-bonds-for-capital-gains-and-the-incoming-global-recession/
It’ll probably hit 800 the day they announce Fisher is taking over from Bernanke