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Longest Equity Market Consolidation

The S&P 1000 has been in a consolidation pattern for most of this year. This is the longest consolidation pattern since at least 1995.

What could this long consolidation mean for the future direction of the stock market?

In my opinion, it means nothing about the longer-term direction. But in the short to medium-term, very long consolidations tend to be resolved to the downside and precede a correction but not necessarily a bear market.

Caveat emptor: the samples are small. Over the longer-term US equity markets have a solid positive drift due to wealth creation and worldwide dominance. Any forecasts of bear markets could be based on wishful thinking, as those seen daily in social media and based on various patterns, technical or fundamental.

Disclaimer:  No part of the analysis in this blog constitutes a trade recommendation. Read the full disclaimer here.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

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