5% Down Weeks

Earlier today, a client asked me if I expect the market to "bounce" (I'll feature my reply in this weekend's commentary). Because I'm thinking you're maybe wondering the same thing---while no one (least of all yours truly) knows for sure what the next few weeks/months will bring---here's a little history:

Since 1980 there have been 28 other weeks that have seen a selloff of this week's magnitude (5.69% for the S&P 500), or greater:

One week later the S&P was up 60.7% of the time with an average gain of .50%.  

Best: 12.03%     Worst: -18.20%

Four weeks later the S&P was up 60.7% of the time with an average gain of 1.65%

Best: 23.28%     Worst: -19.50%

Twelve weeks later the S&P was up 71.4% of the time with an average gain of 4.95%.

Best: 34.50%     Worst: -20.60%

To paraphrase yesterday's message: I offer up the preceding with a bit of hesitation. For, while it may make you feel better about this week’s market action, it offers no guarantee that one, four or twelve weeks from today the market will be higher than it is right now—despite the fact that that’s been the case 61%, 61% and 71% of the time respectively since 1980. In fact, I might argue that a further decline over the next few weeks would ultimately be a longer-term positive—as corrections during bull markets are essential to their sustainability.

 Source: Bespoke Investment Group