The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Slow motion ascent
The headlines were uninteresting and markets didn’t do much either. The S&P 500 opened down about 10 points, rallied to +20 points, fell back to flat, and gently lifted again. Tech and energy led among the sectors and consumer discretionary lagged. The crude curve climbed a little. Treasury yields changed a little, flattening the curve a bit. Precious metals climbed small. The big move of note was in Bitcoin, dropping more than 6 percent.
The recent run in the S&P continues. Today was the 9th consecutive positive session. Streaks like that are rare. This is the 19th such streak since 1982. What’s the longest streak in that market history? 12.
That 12-session winning streak happened in 1995, an incredibly lucrative and easy year for the longs. Can we match or beat it? It’s reasonably possible, but I wouldn’t bet on it. That said, the 12-session streak resulted in a 4.4% gain for the S&P 500. Our current streak generated a 3.5% gain so far. If we do rally Wed, Thurs, and Fri, do we think we’ll tack on another percent? It’s not absurd.
While comparing streaks is a bit interesting, it doesn’t predict much. Some will say the streak needs to be unwound by the market going forward. Some will say it’s simply the start of a lucrative run.
That 12-session streak turned out to be just a component of an excellent year for stocks. The S&P climbed another 6% in the 3 months following the streak.
Will our streak meet or beat the old? It’s fun to make a guess but really that’s not what we should attempt to learn from the current streak that’s already in the books.
Here’s the make-or-break question:
Is this 9-session streak the sign of an excellent bull market that is *in-progress* or is it the sign of the final top?
I think the answer is counterintuitive to most. This is the sign of us being in the middle of the party.
We’ll just have to see where we go from here in the next month, quarter, and remainder of the year to make the determination with certainty.
See you tomorrow.
-Mike
Visdom Market Commentary
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