The S&P 500 Index has made a new all-time closing high in just over 27% of trading days in 2021 through Thursday, the third-highest percentage
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The S&P 500 Index (SPX) advanced Thursday to mark a new all-time closing high at $4429.10 before continuing higher intraday Friday to break a quadruple top on its default chart and print a new all-time chart high at $4440. Trading on Thursday also led the CBOE SPX Volatility Index VIX to break a double bottom at 17.50, which moved the Index back into an overall negative trend prior to its continued decline Friday to 17. This decline in volatility paired with high levels for the core equity benchmark is consistent with historical averages as the VIX has an average level of about 18 when SPX reaches a new all-time high so far in 2021. If we look at averages from 1950 through trading Thursday, the VIX has an average level of roughly 15 when the SPX hits a new all-time high, so we might expect even more of a decline in volatility if SPX continues to push higher.
This year has seen a total of 43 new all-time closing highs for the S&P 500, which is the tenth highest number of all-time closing highs seen in any year since 1950. This equates to about 27.7% of the trading days so far this year, which is the third-highest percentage of all-time closing high trading days over the same timeframe. Interestingly enough, we have seen this year’s all-time highs come with an average SPX OBOS reading of just 61%. This is below the average OBOS reading at all-time highs since 1950 at 85%, indicating 2021 has seen a much steadier ascent for the core market benchmark as it navigates uncharted waters.
Annual returns for SPX in other years with a significant amount of new all-time highs are generally very positive. If we examine only the years that have seen at least 10% of the trading days hit fresh closing highs, we are left with 25 years since 1950. The average return for SPX in those 25 years sits at over 19%, which is slightly higher than the year-to-date return for the Index in 2021 at 17.92% (through 8/5). This steady improvement for the index has come with positive recent participation readings, as the Bullish Percent for SPX ^BPSPX reversed back up into a column of X's last week, and the Positive Trend for SPX ^PTSPX sits in a high field position at a chart level of 82%. While these intermediate and long-term indicators each demonstrate strength, the more near-term focused Ten Week for SPX ^TWSPX sits at a reading of just 56% through trading Thursday. While this does show that over half of the stocks in the S&P 500 are trading above their ten-week moving average, it also means that 44% of the stocks are still trading below that average, we have seen this indicator sit at much higher levels earlier this year with readings as high as 92% in April. This points toward the potential for further near-term improvement, making the TWSPX indicator an important indicator to monitor for continued advances as we head toward the end of the year.
