Study: will the stock market make another correction this year?


The S&P made an 11.8% “small correction” from January – February 2018.
When the stock market begins and finishes a “small correction” in the first quarter (January-March) of a year, it ALWAYS makes another correction that year. Hence, we can expect that there will probably be another 6%+ “small correction” sometime later this year. The U.S. stock market will be much choppier in 2018 than in 2017. This is not a “goldilocks” year.

  1. January – February 2014: 6.1% “small correction”
  2. February – March 2011: 7% “small correction”
  3. January – February 2010: 9.2% “small correction”
  4. February – March 2007: 6.6% “small correction”
  5. January – February 2000: 10.3% “small correction”
  6. January 1990: 11.3% “small correction”
  7. January 1988: 8.2% “small correction”
  8. January 1983: 6.2% “small correction”
  9. March 1955: 6.8% “small correction”
  10. January – February 1952: 6.3% “small correction”

Let’s look at these historical cases in detail.

January – February 2014: 6.1% “small correction”

The S&P made another 9.8% “small correction” in the same calendar year: September – October 2014.

February – March 2011: 7% “small correction”

The S&P made a 21.5% “significant correction” in the same calendar year: May – October 2011.

January – February 2010: 9.2% “small correction”

The S&P made a 17.1% “small correction” in the same calendar year: April – July 2010.

February – March 2007: 6.6% “small correction”

The S&P made another 11.9% “small correction” in the same calendar year: July – August 2007. A bear market started in October 2007.

January – February 2000: 10.3% “small correction”

The S&P’s bull market ended 1 month later in March 2000.

January 1990: 11.3% “small correction”

The S&P made a 20.3% “significant correction” in the same calendar year: July – October 1990.

January 1988: 8.2% “small correction”

The S&P made 3 more “small corrections” in the same calendar year:

  1. March – May 1988: 8.7% “small correction”
  2. June – August 1988: 7.3% “small correction”
  3. October – November 1988: 7.4% “small correction”

January 1983: 6.2% “small correction”

The S&P made another 7.6% “small correction” in the same calendar year: June – August 1983.

March 1955: 6.8% “small correction”

The S&P made another 10.5% “small correction” in the same calendar year: September – October 1955.

January – February 1952: 6.3% “small correction”

The S&P made another 6.8% “small correction” in the same calendar year: August – October 1952.

Conclusion

  1. 7 of these 10 cases saw another 6%+ “small correction” sometime later in the same calendar year.
  2. 2 of these 10 cases saw another “significant correction” sometime later in the same calendar year.
  3. 1 of these 10 cases (2000) saw a bear market begin in the same calendar year.

This is the year to be patient. It’s ok if you miss the stock market’s rally. There will be another correction for you to buy stocks. Stocks will not rally nonstop the way they did in 2017.
*The Medium-Long Term Model predicts that a bear market will not begin in 2018.
Read Stocks on March 13, 2018: outlook

5 comments add yours

  1. Hello, Troy. I want to thank you for your publications that have been very helpful. I would like to ask you when you think the next correction could happen ?. Greetings. JP

    • I don’t trade the “small corrections”. But if I had to guess, it will start this summer or fall.

  2. Troy, it also looks like there is rondomness on which months subsequent correctiontions occur.

  3. Hello Troy
    So, there is a great chance that there will be another “small correction” during 2018.
    You also say that 2018 will be much “choppier” than 2017 (so far, it is!)
    Do you think anyway that 2018 will end with a net and significant increase on S&P, since we are in the last period of the bull market?
    (Thank you for your posts, really appreciate them)

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