The Dow Jones Industrial Average is getting all the attention today for breaking a big round number. But the S&P 500 has refused to be left out–it’s trying to close above 1,800, after breaking that big round number for the first time ever.
Getty Images The S&P 500 is up 0.1% at 1,800.48 at 2:29 p.m., getting a boost from big gains in Precision Castparts (PCP), which has risen 3.6%, Jabil Circuit (JBL), which is up 2.5% to $20.32 and Celgene (CELG), which has jumped 2.5% to $154.86. Even Abercrombie & Fitch (ANF) is lending helping hand today–its shares are up 2.5%.
The S&P 500 is also trying to accomplish another rare feat: a seventh straight week without a loss. MKM Partners’ Jonathan Krinsky looks at what that would mean:
The S&P 500 (1798.18) closed higher for the sixth consecutive week on Friday, gaining 6.29% over that period, and recording another new all-time high. Since 2004, the SPX has been up seven weeks in a row just three times, and since 2000 just six times. Three of the six instances occurred in late 2003 into 2004, as part of a nine week winning streak.
When looking at any streak, it is important to look not just at the total number, but what the index in question did over the streak. What stands out to us is the consistency of the gains during these prior streaks. In every instance, the total gain over those seven up weeks was between 7%-9%. Further, the average gain of the 7th up week in a row has been 0.99%. Therefore, if the SPX is going to make it seven in a row, a gain of 1-2% this week would be consistent with prior occurrences. It also suggests that the current streak is not just a statistical illusion (i.e. if the SPX was up six weeks in a row but only gained 3% over that stretch).
Pavilion Global Markets’ Pierre Lapointe and team worry about the ratio of insider sellers to buyers and what it means for returns during the next three to six months. They write:
The recent rally in equities has not led managers to trim their positions in their own company’s stocks more than usual. Over the past three months, there were 1238 insider sell announcements for S&P 500 companies. However, we saw 109 insider buying announcements over the period, which is at the low end of the range of the past decade.
As a result of the increase in sell announcements and the low number of buy announcements, the insider sell/buy ratio is back to 11.8, near the top of the range of the past decade.
Historically, spikes in the sell/buy ratio heralded weak returns in the three-to-six months that follow. Since 2003, when the ratio of the number of sells to buys over a three-month period is higher than 11 times (as it is currently), the S&P 500 is down 0.7 on average after three months and 5.9% after six months.
So which is it? More gains or time for pain?
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