This is a Honey Badger Market.

By David B. Armstrong, CFA | Jul 14, 2014 | Weekly Market Commentary

Whoa, watch out says that bird!  Ewww, it’s chasing a Jackal! Oh it’s got a Cobra…oh it runs backwards…watch it dig.  You do all the work for us Honey Badger and we’ll just swoop in and pick up the scraps…

This market just seems to take what it wants.

If you don’t get the joke you’ll need to watch the viral video where Randall does a hilarious voiceover to a video on the honey badger that was originally a National Geographic special on the naturally ornery critters.  I’ll warn you that it’s rife with F-bombs and other four letter words…but I’ll also assure you that every 14-year-old you know has seen it multiple times and it made my Mom laugh, too. So if you need a benchmark for levels of inappropriateness, there’s that.

I wrote a blog on Friday that was about corrections – if you missed it you can read it here.  But I did some more reading over the weekend and I’ve got some more thoughts below on sell-offs and 20% corrections.

While the markets sold off a little last week, they are still trending up and as I write this blog, the S&P 500 is trading up about 0.50% for the day.  Here’ s how the markets did for the week.

Bull markets are generally classified as any time the markets move 20% or more without a 20% correction.  Bear markets are anytime the markets corrects 20%.  So with that, it’s safe to say that we have been in a Bull Market since March of 2009.  But if you remember back to 2011, we came REALLY CLOSE to that threshold of 20%.  In fact, by October 3^rd of 2011, the S&P 500 fell 19.38% from its CLOSING high set on April 29^th, 2011.

Now if you look at the fall from the INTRDAY high on April 29^th and an INTRDAY LOW on October 3^rd, it was a 21.58% fall…passing through the 20% threshold for a bear market.

Yeah, yeah, yeah….details, details, details…

However, the market DID MOVE over 20% down so now in 2013, should we consider the start of the current Bull Market as 2009 or late 2011?  Is the current run really all that “long in the tooth?”

I don’t have an answer, I’m just pointing it out because at the end of the day it may not matter.  If we look back to 2009 as the start of the S&P 500 Bull Market, it was at 1942 days long on July 3^rd. So while that is certainly long and strong (did you immediately start to add Sir Mix-A-Lot lyrics into that sentence?), it is only the 4^th longest in history, according to Bespoke Group.

The longest?  4,494 days without a 20% correction…1987 to 2000.

One more thing about the market getting long in the tooth – there are a lot of other popular indices that DID have a +20% correction (based on closing process) in 2011.  For example, the S&P 400 MidCap index (-27.94%), the Russell 1000 Large Cap index (-20.31%) and the Russell 2000 Small Cap index (-29.56%).

So maybe the current market is not as long as most people are saying.  Just a thought.

Finally, check out this chart from Dorsey Wright & Associates. Pay particular attention to the very right hand side…then note the other green sections.  Good markets can last a long time.

Earnings

Things will start getting busier this week even though Alcoa released their earnings last week.  55 companies from the S&P 500 will report this week.  According to Thomson Reuters, profits (earnings) from the second quarter are expected to grow a modest 6.1% versus one year ago.  Here’s a chart that shows the S&P 500 quarterly operating earnings-per-share by quarter.  Note that the light bars on the right side are forecasts for the second and third quarter.  There are some ups and downs quarter-to-quarter but for the most part it’s a nice trend up from 2008.

And Finally

45 Days until you have to suffer through another college football season and my short weekly commentary on the Gamecocks.

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