We’ve been tracking this one for a while now, but it’s been 232 trading days since the S&P 500 saw even a 3% correction.

 

 

One of the longest stretches in history.  So does this mean there haven’t been any events of any significance in the last year to actually move markets down just 3%?  I would say no, quite the contrary.

 

The US saw one of the more polarizing election cycles in memory, and since then it’s not like things have settled down.  There’s White House firings, special prosecutors, and just general gridlock.  There is growing geopolitical risks both out of North Korea as well as in the Middle East.  The Fed announced it will begin the daunting task of unwinding their massive 4.5 trillion dollar balance sheet this month.

 

There’s been plenty of other seemingly important things as well that the market has just summarily ignored, including one from just last Friday.  For anybody taking score, the US has been smashing the jobs growth record for quite some time now.

 

The previous record for consecutive monthly jobs growth was 48 straight months from July 1986 to June 1990.

 

Last Friday’s jobs report saw the US lose 33,000 jobs.

 

That’s a lot of positive bars, 83 of them to be exact.  The previous record was 48 months, and the US just ended the current streak at 83!

The markets reaction?  Nothing.  Crickets.  No doubt the severity of hurricane Harvey and Irma took a toll on the report.  It was heartbreaking watching the coverage and seeing the devastation it caused to so many families.  I certainly don’t mean to downplay the tragedy in any way shape or form, but only a small fraction of the labour force would be affected by the hurricanes.  Going from an average of 175,000 jobs added a month to losing 33,000 and the market didn’t even flinch.

One wonders, what is it going to take to see a 3% correction?  In my opinion a healthy market is one that reacts well to good news and responds in kind to bad news.  I’m not talking about crashes and catastrophe, but small pull backs along the way is perfectly healthy.

 

Just like with earthquakes.  When the tectonic plates are able to shift after building up a little friction it’s healthy.  It just manifests in a series of smaller tremors.  But when the pressure builds for too long without a shift, that’s when you get the big jolt.

 

No forward predictions here, that’s not my style.  We trade the numbers and only the numbers.  But I can’t help but be a little worried about a market that only moves in one direction.  Especially when you factor in how much of the volume is coming from computers.  Can we really predict what will happen when there’s a shift? 

 

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