The last time the Dow Jones Industrial Average closed down by 1% was back on October 11, 2016, 161 calendar days and 110 trading sessions ago. Saying the market needed to take a breather would be an understatement. Looking back five years to 2012, the Dow averaged 46 days a year closing up or down by 1% or more. During this timeframe, the market averaged half of those days (23) on the downside. Until now, the market was accustomed to a couple 1% closing moves on the downside every month. It’s been nearly four months without hardly even a selloff of a measly half-percent. Since the election, this market has come to know only one direction… north! Up to this point and through the month of April, stocks have historically done quite well. The Sweet Six months, which span from November through April and are known for its cyclical strength, have once again enriched investors meaningfully.
What does today’s 1% down day loss mean for the market in the days ahead? In my opinion, others stocks are due for an adjustment. The Maven of Manhattan, Sam Stovall says, “A pull-back or correction in price or time could reset the clock nicely.” March Madness is all the rage this time of year. It’s a fitting reminder that we have a month to go in the Sweet Six. As April, the final month of cyclical strength, wanes, it may be wise to lighten-up and rebalance one’s portfolio, as the Dow Jones moves into the cyclical weaker months… what I call the Sour Six.