The stock market could learn a lot from Swan, Ajax and the rest of the gang from the 1979 cult favorite "The Warriors."
So goes the thinking from Convergex's chief market strategist, Nick Colas, who sees parallels between the retreat the headline gang from the movie had to beat back to Coney Island, and the pullback stocks need if they are going to remain in a healthy state. "The Warriors" begins with a gang summit in New York during which the leader is murdered and a rival gang wrongly blames the Warriors, who then have to battle their way back home.
In his daily note Tuesday, Colas recalled that "The Warriors" closely mirrored a story from ancient Greece called the "Anabasis," which tells of how 10,000 Greek mercenaries caught in the Persian Empire fought their way to the Black Sea.
With that in mind, he provided both a movie synopsis and a dissection of the market's current condition:
A small gang (of) petty thugs has to make its way from the northernmost bit of the Bronx to Coney Island in south Brooklyn after being wrongly accused of killing a powerful gang leader named Cyrus. On the way, they encounter other gangs, police, and all the mayhem for which 1970s New York was rightly known. They do eventually make it back to the shores of Coney Island, just as the 10,000 made it to the coast of the Black Sea. Yes, "The Warriors" is a direct take-off of the "Anabasis," right down to the shout out for the long dead Persian King Cyrus.
The message is therefore the same in both narratives: a successful retreat in the face of overwhelming odds can be rightly considered a victory.
Colas believes the "retreat" the market needs is a correction, or a 10 percent drop in the S&P 500. That hasn't happened in nearly four years, one of the longest streaks ever.