After being down for three straight months in November, December, and January, for the first three-month losing streak since late 2011, the S&P 500 has soared back, up for five consecutive months. The logical question is: What does a five-month win streak mean as we look ahead?
Although five straight months of gains sounds like a lot, going back in history we have seen many streaks that were much longer. In fact, the longest monthly winning streak ever was an incredible 12 straight months that ended in early 1936.
Going back to 1950, this was the 24th time the S&P 500 was up for five straight months.
Diving into those previous 23 times, the results are extremely impressive. Incredibly, the S&P 500 has been higher a year later all 23 times, with an average return of 12.9%. The near-term returns are also stronger than the average returns. Does it matter if the S&P 500 closes at a new monthly all-time high (like in July)? That has happened 13 other times and the returns are fairly similar to what happens after any five-month win streak, but once again, much better than the average future returns.
Although we have some growing near-term concerns, as we noted in our just released Weekly Market Commentary, “Time for an August Swoon?” this study would suggest that the likelihood of higher prices as we go out later this year and even into early next year is possible. Strength usually begets strength and this study further confirms that.
Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
The economic forecasts set forth in the presentation may not develop as predicted.
The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.
Stock investing involves risk including loss of principal.
The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
This research material has been prepared by LPL Financial LLC.
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