The S&P 500 Extends Its -10% Correction Streak...

As of today, the S&P 500 has gone 1,192 calendar days (i.e., from 10/03/11 through and including 01/07/15) without a -10% or greater drop in the index, the 4th longest stretch without a double-digit pullback in the last 50 years.

Small-Cap Stocks Are In a Full Blown Correction of Greater Than -10%...

It's Been A Very Long Time Since We've Had A -10% Correction...

As of January 8, 2014, the S&P 500 has gone 828 calendar days (i.e., shown in weekly chart above, from 10/03/11 through and including 1/08/14) without a -10% or greater drop in the index, the 5th longest stretch without a double-digit pullback in the last 50 years.

source: BTN Research

Survey: Is There A Greater Probability of a +20% Rally or a -20% Correction?

Since the last time this survey of stock market strategists was done in January 2011, the number of respondents who see a -20% decline as being more likely than a +20% rally has reversed.

Now the majority (by nearly 2 to 1) expects a -20% decline    before the next +20% rally.

Survey: Is There A Greater Probability of a +20% Rally or a -20% Correction?

Quote of The Day: Mark Arbeter, S&P’s Chief Technician Warns...

“Despite the hoopla over the DJIA crossing 12,000 and S&P 500 breaching 1,300 this week, we see mounting cracks in the dam. Many indices in the U.S., as well as globally have failed to follow the DJIA and S&P 500 over the last week, and we see this as a major warning that a pullback or correction is near.”

“In addition to the non-confirmations by many indices, we are also seeing plenty of divergences with respect to market internal data. At the same time, price momentum is overbought on a daily and weekly basis, and market sentiment is tilted very heavily toward the bullish camp. This, to us, all adds up to a 5% to 10% decline in the major indices over the next month or two.”

Status Of This Market: Bull or Bear?

Ned Davis Research reports that the average bull market since 1900 has produced gains of +81.2% and that the S&P had popped up +79.93% through April 23. Therefore, this bullish phase is long in the tooth. 

According to Bespoke Investment Group, there have been 58 corrections of -10% or more in the Standard & Poor's 500 since 1927.

In 25 cases (43%), corrections that reached the -10% mark went on to become a full-fledged bear market, while 57% stopped short of turning truly ugly.

However, Bespoke also warns us that in the 32 instances when the market has dropped as much as this one (as of June 7th the S&P had pulled back -13.7% on a closing basis and -14.68% on an intraday basis) the corrections have a distinct tendency toward continuing.

According to Bespoke’s research, only 7 corrections of this magnitude stopped short of the bear market definition (generally defined as a decline of -20% or more). 

And in the 25 instances in which the decline reached the -20% mark, the average decline of the bear move was -35.5% from top to bottom.

In light of the above, it's prudent to err on the side of capital preservation until the climate improves.