The S&P is Blazing Its Hottest Streak in 4 Years

There are lots of stories circling about stock market volatility -- or lack thereof -- and for good reason. The last time the S&P 500 Index (SPX) dropped 3% or more was June 24, 2016 -- 333 days ago -- during the Brexit panic. The S&P is now in the midst of its longest streak without a 3% pullback since 2013, and just its fourth such stretch in 20 years, according to Schaeffer's Senior Quantitative Analyst Rocky White. Below, we'll take a look at how the index tends to perform after these rare streaks.

Here are the 14 other times the SPX has gone at least 333 days without dropping 3%, going all the way back to 1929. The longest streak ever lasted from June 1962 to August 1972 -- more than a decade.

In fact, once the streak gets to 333 trading days, it tends to last a long time, White pointed out. Consider that:

10 out of 14 times the streak lasted at least another year (333 + 252 = 585 trading days)Eight of 14 times it lasted another two yearsFour of 14 times it lasted another three yearsThree of 14 times it lasted another four yearsTwo of 14 times it lasted another five yearsAnd once, during the aforementioned streak that started in 1962, it lasted another eight yearsAs you might expect from those stats above, the S&P tends to outperform after going 333 days without a drop of 3%. While the index averages a one-week decline of 0.08% after these signals -- compared to an anytime average one-week gain of 0.14%, going back to 1943 (the start of the first streak) -- it averages a two-week gain of 1.22%, roughly double its anytime two-week return.

One month after going 333 days without a 3% drop, the index was up 2.88%, on average, and was higher 78.6% of the time. Two months out, the SPX was 4.63% higher, on average, with an impressive win rate of 85.7%. That's compared to an average anytime one- and two-month gain of 1.86% and 3.7%, respectively, with win rates of 63.1% and 66.2%.

So, if history is any indicator, traders might expect the S&P 500 Indexto extend its quiet grind to record highs over the next few years. The average eventual streak of the 14 other stretches of at least 333 days without a steep down day is 968 trading sessions, or about four years.

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