1-3-18 2:54 PM EST | Email Article

By Ryan Vlastelica

It has been more than a year since the S&P 500 had a 5% drawdown, a near-record

The U.S. stock market, which is coming off a year that saw it log a series of milestones for strength (http://www.marketwatch.com/story/the-dow-is-about-to-set-a-record-for-setting-records-2017-12-18) amid an unprecedented lack of downside, might not be done setting records.

The S&P 500 is nearing another record streak, the latest example of a bull market that just won't quit.

"At 381 trading days and counting, the market is now at its third-longest streak without a 5% drawdown since 1930, trailing only 394 (1994-96) and 386 (1963-65)," Goldman Sachs analysts wrote in a note to clients.

Goldman's analysis was through the end of trading of 2017, meaning it doesn't include Tuesday's session, when the index closed at a record (http://www.marketwatch.com/story/us-stocks-search-for-a-springboard-to-open-2018-2018-01-02). Including Tuesday's session would lengthen the stretch to 382, and if the current trend continues--which seems a safe bet, as Tuesday's records means it would have to fall the full 5% at a time with few major trading catalysts--it will match the second-place record at the end of trading on Monday, Jan. 8, and surpass it the following day. It will match the longest streak ever at the end of trading on Jan. 18, a Thursday.

Read:These are all the records stock indexes hit with 2017 trading at a close (http://www.marketwatch.com/story/these-are-all-the-records-stock-indexes-are-poised-to-hit-as-december-comes-to-a-close-2017-12-29)

The S&P is already in its longest-ever stretch without a 3% decline (http://www.marketwatch.com/story/sp-500-is-poised-to-make-uncanny-stock-market-historyfor-doing-almost-nothing-2017-10-12), a drop that is historically extremely common. A decline of such meager magnitude hasn't occurred since Nov. 7, 2016; the index has been extending this record since surpassing the previous one in October.

The lack of drawdowns is a sign of how strong the market has been in recent months. The S&P rose 19.4% over 2017, its best year since 2013, and on a total-return basis it has gained for 14 straight months (http://www.marketwatch.com/story/with-november-in-the-books-the-sp-500-put-another-chapter-in-its-historic-march-higher-2017-11-30), a record. However, most of the daily gains have been slight, which points to the lack of volatility in markets, which is, as much as the factors driving markets higher, the real cause behind the lack of pullbacks.

Goldman called low volatility "the defining characteristic of the U.S. equity market in 2017." The investment bank wrote the S&P 500 had a realized volatility score of 7 in the year, which is "ranked in the first percentile since 1930." It added that "the risk-adjusted price return of 2.9 ranked in the 97th percentile relative to history."

According to the WSJ Market Data Group, the absolute daily percentage change for the Dow Jones Industrial Average was 0.31% in 2017. It was 0.3% for the S&P, and in both instances, that represents the smallest absolute daily percentage since 1964 (http://www.marketwatch.com/story/the-last-time-stocks-were-this-quiet-was-the-year-the-beatles-went-on-ed-sullivan-2017-12-14). For the Nasdaq Composite Index, the absolute daily percentage change was 0.44%, the smallest since 1989.

The average observed one-month volatility in the S&P 500 was lower than any other year since 1970 in 2017, and of the 56 lowest closing levels in the history of the Cboe Volatility Index (since 1990), 47 of them occurred in 2017. The so-called "fear index" also notched two all-time closing lows.

-Ryan Vlastelica; 415-439-6400; AskNewswires@dowjones.com


(END) Dow Jones Newswires

01-03-18 1454ET

Copyright (c) 2018 Dow Jones & Company, Inc.
Copyright 2018 MarketWatch
Add a Comment
If you have questions or comments about this topic, check out our message boards.
Sponsored Links
Buy a Link Now
Sponsor Center
Content Partners