True or false? The S&P 500 is on the longest winning streak without a 3% pullback since the Great Depression.

While you ponder the answer, here are a couple of factoids that may explain the market’s relentless, yet sneaky (no daily gain of more than 1% since September 11) advance.

The September 24 Profit Radar Report published the picture (of bearish MarketWatch headlines) below and stated:

“Our [major market top indicator] continues to confirm the latest S&P 500 highs. Investor sentiment also is not as bullish as one would expect at all-time highs. 5 of the 6 top MarketWatch headlines were bearish on Friday.

Therefore, if bearish seasonality and other short-term bearish forces fail to draw the S&P below 2,480 in the coming week (and the S&P moves above 2,530, we will have to consider a more bullish Elliott Wave Theory structure, which would likely see wave 3 extend to 2,600 +/-.”

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The Answer

The answer to the introductory question is: True. The S&P 500 has never gone longer without a 3% pullback.

The last 3%+ correction concluded on November 3, 2016, just before the presidential election. The second longest streak ended in December 1995.

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True or false? The next 3% correction is just around the corner.

Big Picture

The long-term S&P 500 chart highlights two trend channel resistance levels (see blue chart insert for zoomed-in view).

Under normal circumstances, we would expect the S&P 500 to show a significant reaction to the trend channels, but these are obviously not normal circumstances.

Based on the long-term trend channels, we could see a pullback near current trade, but unless this pullback gathers down side momentum, the S&P may grind higher to 2,600+/- before we see a larger correction.

Continued analysis - including our amazingly reliable major market top indicator (which has continually pointed higher) - is provided via the Profit Radar Report. 

Simon Maierhofer is the founder of iSPYETF and the publisher of the Profit Radar Report. Barron's rated iSPYETF as a "trader with a good track record" (click here for Barron's profile of the Profit Radar Report). The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013, 17.59% in 2014, and 24.52% in 2015.

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