By Christopher Mistal, Stock Trader's Almanac, Feb. 19, 2013.
Although the S&P 500 ended last end with a minuscule 0.1% loss on Friday, its weekly performance was sufficient to extend its weekly winning streak to seven consecutive weeks. Including the current streak, the S&P 500 has accomplished this feat just 28 times since 1950 and 36 times since 1930. Prior to now, the last occurrence ended in January of 2011. In that year, the S&P 500 also began the year with a near vertical trajectory that lasted until the day before Presidents’ Day (6.8% year-to-date gain).
On the day after Presidents’ Day, the S&P 500 began a three-and-half week pullback that eventually erased all of its yearly gains before bottoming in mid-March. Today’s solid performance has eliminated the possibility of this year following the same course, but the week after February options expiration still has a bearish history with declines in 11 of the last 16 years and all streaks eventually end.
In the chart below, the previous 27 weekly winning streaks of 7 or more weeks have been plotted to show the S&P’s performance the over the 30 trading days before and the 60 trading days after the streak ended. On average, when the streak ends, gains resume, but the pace slows significantly.
On the day after Presidents’ Day, the S&P 500 began a three-and-half week pullback that eventually erased all of its yearly gains before bottoming in mid-March. Today’s solid performance has eliminated the possibility of this year following the same course, but the week after February options expiration still has a bearish history with declines in 11 of the last 16 years and all streaks eventually end.
In the chart below, the previous 27 weekly winning streaks of 7 or more weeks have been plotted to show the S&P’s performance the over the 30 trading days before and the 60 trading days after the streak ended. On average, when the streak ends, gains resume, but the pace slows significantly.
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