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History Says A Big Move Is Coming For Stocks

Published 05/16/2016, 03:28 PM
Updated 07/09/2023, 06:31 AM

What Can We Learn From Last Three Years?

The chart of the NYSE Composite Stock Index below shows equities have been indecisive since the second half of 2013.

U.S. Stocks Since 2013

The lack of sustained progress in either direction tells us the battle between the bulls and bears has been fairly evenly matched.

1993-1995 Bullish Example

A similar indecisive period took place in the mid-1990s.

U.S. Stocks In The Mid 1990s

Periods of consolidation are often followed by big moves once the market “breaks out of the box”. In the 1993-95 case, the resolution was to the upside.

U.S. Stocks Mid 1990s Breakout

2006-2008 Bearish Example

A similar period of indecisive investor behavior took place between the fall of 2006 and summer of 2008.

Indecisiveness

Harder markets are typically followed by easier markets. In the 2006-08 example, the easier market produced a strong and discernible bearish trend.

Discernibly Bullish Trend

S&P 500 Moving To 2,340 or 1,680?

This week’s stock market video examines the current period of indecisive investor behavior, including some visuals on what a break to the upside and downside might look like.

Big Moves Can Go Either Way

When we are in a period of long-term consolidation, it often feels like the market will never break from the range. While anything is possible, history says we should have contingency plans in place for a shocking push higher and an alarming crisis-like plunge.

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