In One Chart: The rally in stocks is days away from setting a notable record for longevity

In One Chart: The rally in stocks is days away from setting a notable record for longevity

The U.S. stock market has been stuck in a tight trading range for much of 2018, and while this is setting it up to post at least one notably bearish record, it is also days away from a milestone that market bulls should feel good about.

According to the WSJ Market Data group, the S&P 500 SPXT, +0.88% SPX, +0.87%  has, on a total-return basis, gone 514 trading days since it last closed below its 200-day moving average. Should it hold above that level, a closely watched gauge for long-term momentum trends, for another 15 sessions, that will make for the longest such stretch in its history, based on data that goes back to 1988.

This milestone was earlier noted by Charlie Bilello, director of research at Pension Partners.

The longest stretch for the total-return S&P 500 to hold above its 200-day moving average, lasted for 528 sessions and ended in August 1998.

The total-return index includes dividends, which both boosts gains and lessens downside. On an absolute basis, the S&P 500 last closed below its 200-day on April 2. 51

Currently, the S&P 500 has a dividend yield of 1.78%. Thus far this year, the S&P 500 is up 4.5%, compared with the 4.8% gain of the total-return index.

At current levels, the S&P is 4.2% above its 200-day moving average of 2,679.33. The total-return index is also 4.2% above its own 200-day moving average, which currently stands at 4,865.43.

Despite the length of the S&P’s stretch above the moving average, the scale of the rally over the period is still far from record levels. In 1998’s record-setting rally, it gained 79.59%. In the current one, the S&P has only risen 44.51%.

While few investors would dismiss such a move, two shorter stretches above the 200-day coincided with bigger rallies. In the third-longest stretch, which lasted for 477 sessions and ended in 2014, the S&P gained 45.91%, according to the WSJ Market Data Group. Even the fourth-longest stretch, which lasted 405 trading days and ended in 1996, saw a bigger move, of 46.4%.

The S&P could easily eclipse the move seen over those two other stretches, but recent trading has been decidedly rangebound, with the benchmark index struggling to break out into new highs, though it has also found support at its 2018 low.

Read more: The stock market’s next step could be its most pivotal

The S&P has been in correction mode — defined as a 10% drop without a complete recovery — since early February. It is days away from a setting a milestone that investors will feel less optimistic about: its longest stretch in correction territory since 1984.

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