The S&P 500 Index closed at an all-time high on March 31, 2013 after a five and a half year hiatus. Since then, the S&P 500 has made 53 new all-time closing highs, including today; rising 20.87% in the process. But what does closing at an all-time high indicate for near-term returns? Below is a chart that graphs the forward 10-day return (y-axis) against the number of days since last achieving a new all-time closing high (x-axis).
The chart indicates a weak, but indirect relationship between the number of days since last achieving an all-time closing high (ATCH) and the near-term future return. Twenty seven trading days have passed since the last ATCH on April 2, which may mean that a period of digestion for equity markets is in order. Perhaps it is worth noting that the seven day range following the April 2nd ATCH saw only minor upside (+0.34%) but a decent amount of downside (-4.05%).
As equity markets continue to plateau, momentum on either side should be faded.