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Market Lab Report - How much longer can this record breaking tight streak last?

Since 1927, this is the first time the S&P 500 has had daily moves of less than 0.3% for 13 days in a row. Earlier this year, the Dow recorded its lowest one-month trading range since 1900, and in the summer of 2016, the S&P traded within a 1.77% range for 42 consecutive days, the tightest such streak in history.

It is now 73 trading days since the S&P increased by more than 1% in any one day. Give it another 7 days and we will beat the prior record set back in November 2006 and March 2007. It is no surprise that the VIX has been plumbing new record lows. This has presented a wholly unique challenge to our VIX Volatility Model (VVM) which thrives on volatility. While VVM was up +54.3% earlier this year, it gave back these profits due to these aberrant conditions. Nevertheless, further fine-tuning has helped it adjust to such anomalous market conditions. More importantly, such fine-tuning has not hampered its profits going back to 2009.

The stock market typically looks forward by 6 to 9 months. Given decent odds that rates will be hiked once again when the Fed meets in December, we could be near a tipping point though bull markets can go a lot longer than anyone's guess.

The current stock market malaise is due to reluctant markets that have been artificially inflated since QE began in 2009. Nevertheless, with QE at record levels, markets are pushing on a string as they baby step higher. Keep in mind that when major averages fall by even 2%, leading stocks often fall several percent or more, thus it has been key to keep your stops tight. It has also been profitable to buy when the numerous low risk entry opportunities have presented this year.

Our Voodoo low volume signatures and Wyckoff undercut & rally offer entry points typically less than 2% from the exit point. Meanwhile, upside is typically several percent or greater. Time value is also key as Wyckoff undercut & rally formations typically come after the stock market has a minor correction. Thus with the market bouncing, leading stocks often bounce three to five times as hard yielding excellent profits. Some examples HERE.

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This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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