Is there any statistical backing to the theory that markets typically tip their hand before significant declines?
Our firm's extensive market research has shown time and time again that much like shifting weather patterns, observable shifts in data points typically take place over time before significant market declines. From CNBC:
“Over the past 40 years, the S&P 500 posted an average of 67 trading days of high volatility, in which it rises or falls by 1 percent or more, before it tops out and drops at least 10 percent.”
The research above tells us rather than "coming out of nowhere", observable deterioration typically starts to occur in an incremental fashion almost three months before a significant market decline.
This video clip compares the concept of data-driven probabilistic forecasting used to track hurricanes to the methods used by the CCM Market Model.