The probability is high for the S&P 500 in February 2022 to be below its February 2021 high. This quant-based conclusion is from my research findings on four clusters of BSAs (Bullish Sentiment Anomalies). Three of the BSA clusters were formed from 1999 to 2017. The fourth BSA cluster since 1999 was formed from 12/3/2020 to 2/18/2021.
The discovery was the S&P 500 underperformed or declined for the 12-month periods which follow a cluster of BSAs. The table below depicts the periods in which a minimum of four BSAs occurred within an 11-week time frame.
The BSA is an acronym for the
Bullish
Anomaly which was discovered in November 2020.
The Globe and Mail Ron Meisels Published February 11, 2021 Bookmark Please log in to listen to this story. Also available in French and Mandarin. Log In Create Free Account
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Let’s look at the indicators. The SPX, the NASD and the TSX appreciated 13.6 per cent, 19.8 per cent and 11.3 per cent, respectively, since October, 2020, lows and moved up in a narrow but rising up-channel. During this time, the percentage of stocks above their 10-week moving averages increased from 48 per cent to 84 per cent, and those above their 30-week moving averages increased from 56 per cent to 89 per cent.
The Globe and Mail Ron Meisels Published January 13, 2021 Bookmark Please log in to listen to this story. Also available in French and Mandarin. Log In Create Free Account
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To understand the market, it is necessary to know how market cycles unfold. A market cycle consists of a secular bull market (SBM), which is a period of about 25 years of rising prices, followed by a secular bear market (SbM), a period of eight or nine years of falling prices. The two previous market cycles consisted of an SBM of 24 years (1942-1966) and an SbM of 8 years (1966-1974), followed by an SBM of 26 years (1974-2000) and an SbM of 9 years (2000-2009). The current SBM commenced at the 2009 low, so it is only 12 years old!