Best of the Week
Most Popular
1. Ray Dalio: This Debt Cycle Will End Soon - John_Mauldin
2.Stock Market Dow Plunge Following Fake US - China Trade War Truce - Nadeem_Walayat
3.UK House Prices 2019 No Deal BrExit 30% Crash Warning! - Nadeem_Walayat
4.What the Oil Short-sellers and OPEC Don’t Know about Peak Shale - Andrew_Butter
5.Stock Market Crashed While the Yield Curve Inverted - Troy_Bombardia
6.More Late-cycle Signs for the Stock Market and What’s Next - Troy_Bombardia
7.US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - Troy_Bombardia
8.TICK TOCK, Counting Down to the Next Recession - James_Quinn
9.How Theresa May Put Britain on the Path Towards BrExit Civil War - Nadeem_Walayat
10.This Is the End of Trump’s Economic Sugar High - Patrick_Watson
Last 7 days
Jeff Gundlach thinks that a Stocks Bear Market has started. Is he Right? - 18th Dec 18
Gold’s Not An Investment – You Won’t Get Rich - 17th Dec 18
Stock Market At Medium-Term Lows, Which Direction is Next? - 17th Dec 18
This Stock Will Drive America’s 5G Buildout - 17th Dec 18
Stock Market Turn In The Tide - Have a Happy Bear Market! - 17th Dec 18
How A NASA Scientist Could Trigger The Next Cannabis Boom - 17th Dec 18
iShares Russell 2000 IWM Leading Stock Market Decline - 17th Dec 18
Where is the Dow Stock Market Santa Rally? - 17th Dec 18
With Weaker Climate Consensus, Expect Elevated Climate Change - 16th Dec 18
SMIGGLE Advent Calendar 2018 UK Contents - What You Get Look Inside Review - 16th Dec 18
Is there a Lump of Coal in Santa's Stock Market Bag? - 16th Dec 18
This Market Will Drive Gold in 2019… - 16th Dec 18
Gerald Celente:Central Banks Can’t Stop a 2019 Debt Disaster - 16th Dec 18
Gold Stocks Triple Breakout - 15th Dec 18
The stock market fails to rally each day. What’s next for stocks - 14th Dec 18
How Low Could the S&P 500 Go? - 14th Dec 18
An Industrial to Stock Trade: Is Boeing a BUY Here? - 14th Dec 18
Will the Arrest of Huawei Executive Derail Trade War Truce? - 14th Dec 18
Trump vs the Fed: Who Wins? - 13th Dec 18
Expect Gold & Silver to Pullback Before the Next Move Higher - 13th Dec 18
Dollar Index Trends, USDJPY Setting Up - 13th Dec 18
While The Stocks Bulls Fiddle With The 'Fundamentals,' Rome Burns - 13th Dec 18
The Historic Role of Silver - 13th Dec 18
Natural Gas Price Setup for a Big Move Lower - 13th Dec 18
How to Get 20% Off Morrisons Weekly Supermarket Shopping - 13th Dec 18
Gold Price Analysis: Closer To A Significant Monetary Event - 13th Dec 18
Where is the Stock Market Santa Claus Rally? - 12th Dec 18
Politics and Economics in Times of Crisis - 12th Dec 18
Owning Precious Metals in an IRA - 12th Dec 18
Ways to Improve the Value of Your Home - 12th Dec 18
Theresa May No Confidence Vote, Next Tory Leader Betting Market Analysis and Forecasts - 12th Dec 18
Gold & Global Financial Crisis Redux - 12th Dec 18
Wow Your Neighbours With the Best Christmas Projector Lights for Holidays 2018! - 12th Dec 18
Stock Market Topping Formation as Risks Rise Around the World - 11th Dec 18
The Amazing Story of Gold to Gold Stocks Ratios - 11th Dec 18
Stock Market Medium term Bullish, But Long Term Risk:Reward is Bearish - 11th Dec 18
Is a Deleveraging Event about to Unfold in the Stock Market? - 11th Dec 18
Making Money through Property Investment - 11th Dec 18
Brexit: What Will it Mean for Exchange Rates? - 11th Dec 18
United States Facing Climate Change Severe Water Stress - 10th Dec 18
Waiting for Gold Price to Erupt - 10th Dec 18
Stock Market Key Support Being Re-Tested - 10th Dec 18
May BrExit Deal Tory MP Votes Forecast, Betting Market Analysis - 10th Dec 18
Listen to What Gold is Telling You - 10th Dec 18
The Stock Market’s Long Term Outlook is Changing - 10th Dec 18
Palladium Shortages Expose Broken Futures Markets for Precious Metals - 9th Dec 18
Is an Inverted Yield Curve Bullish for Gold? - 9th Dec 18

Market Oracle FREE Newsletter

How You Could Make £2,850 Per Month

What Happens Next after February’s Stock Market Selloff

Stock-Markets / Stock Markets 2018 Mar 06, 2018 - 07:12 PM GMT

By: Troy_Bombardia

Stock-Markets

The S&P 500 Total Return Index (including dividends) closed higher for 15 consecutive months from November 2016 to January 2017. This record ended in February thanks to the stock market’s correction.

Historically, these extremely long streaks of consecutive monthly gains were a bullish sign for the stock market.

Here are similar streaks in the S&P 500’s history.


  1. January 2018: 15 consecutive months of gains (present case).
  2. September 1995: 10 consecutive months of gains.
  3. May 1959: 15 consecutive months of gains.
  4. July 1954: 11 consecutive months of gains.
  5. May 1950: 12 consecutive months of gains.
  6. June 1943: 14 consecutive months of gains.
  7. March 1936: 12 consecutive months of gains.

Let’s look at these cases in detail. What happened to the S&P 500 after these streaks ended?

September 1995

This streak ended after 10 months of consecutive gains (S&P 500 Total Return Index).

The S&P 500’s next 22.4% “significant correction” began almost 3 years later in July 1998.

Here’s the S&P 500 on a weekly bar chart.

The next bear market began 4.5 years later in March 2000.

May 1959

This streak ended after 15 months of consecutive gains (S&P 500 Total Return Index).

The S&P’s next 14% “significant correction” began 2 months later in August. The S&P 500 made a new high in the interim.

Here’s the S&P 500 on a daily bar chart.

The next 29.3% “significant correction” began more than 2 yrs later in December 1962.

July 1954

This streak ended after 11 months of consecutive gains (S&P 500 Total Return Index).

The next 21.4% “significant correction” began 2 years later in August 1956.

Here’s the S&P 500 on a weekly bar chart.

May 1950

This streak ended after 12 months of consecutive gains (S&P 500 Total Return Index).

The next 14.8% “significant correction” began more than 2.5 years later in January 1953.

Here’s the S&P 500 on a weekly bar chart.

June 1943

This streak ended after 14 months of consecutive gains (S&P 500 Total Return Index).

The next 23.2% “significant correction” began almost 3 years later in May 1946.

Here’s the Dow Jones Industrial Average on a weekly bar chart. (The Dow is best for pre-1950 data).

March 1936

This streak ended after 12 months of consecutive gains (S&P 500 Total Return Index).

The next bear market began almost 1 year later in March 1937.

Here’s the Dow Jones Industrial Average on a weekly bar chart. (The Dow is best for pre-1950 data).

Conclusion

This study suggests that the S&P 500 will soon make  a new high. The next significant correction or bear market is AT LEAST months away. The Medium-Long Term Model agrees.

Long streaks of consecutive monthly gains mean that the stock market’s momentum is very strong. The first breakdown from strong momentum (i.e. ending the streak) is usually not the death knell for the stock market. Markets top after momentum has already weakened. In other words, markets top when there is a bearish divergence on a monthly bar chart.

By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Copyright 2018 © Troy Bombardia - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules