Quiet Market No More
As the rally not only holds but builds during the day, and with the recent pattern of closing at or near the high of the day, it looks like stocks will finally break the streak of more than 50 days without a 1% move, up or down.
We've looked at streaks like this before, with mixed returns going forward. But let's focus on the times that the long streaks of subdued returns ended with an upside blast.
There were two instances that led to almost uninterrupted upside, in 1954 and 1995. The others either saw significant weakness over the next 2-6 months, or gave back an initial thrust higher (1972). The overall risk/reward was almost even up to six months later, not something we usually see with good opportunities.
If we focus on the times that the S&P also reached a new high at the time of the breakout, we're left with four occurrences:
The two momentum rallies are left, along with two fades. Not a lot to conclude from that.
We've been doing this since 1998, and can't remember a market quite like this. We've had periods where seemingly everything failed due to persistent gains (July 1998, January 2007, pretty much all of 2013 and early 2014), but none like this when the rally actually intensified.