Nine-Day Losing Streak is Over; Now What?

After falling nine consecutive days for the first time in nearly 36 years, the S&P 500 soared more than 2.2% yesterday to end the long losing streak. This is even more amazing when the previous nine days it lost 3.1%, so in one day it made back a large portion of the losing streak. The big question now is: what happens after a long losing streak is over?

Going back to 1928*, there were 10 previous times when the S&P 500 was red at least nine days in a row, and those results are below. Per Ryan Detrick, Senior Market Strategist, “Historically, long losing streaks don’t always lead to strong near-term results, but going out longer term, rarely do they usher in new bear markets. In other words, these events might bring with them a wall of worry, but they aren’t a reason by themselves to turn defensive.”

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Indices are unmanaged index 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.

With the most unique election in decades, it isn’t a surprise that the equity markets are doing things we haven’t seen in years as well. Think about this: during the equity sell-off, copper (historically a good gauge of the health of the overall global economy) was higher every day and is currently up 11 straight days for the second-longest winning streak ever, the earnings recession is officially over and the influential groups of financials and tech are leading the charge, and the transports made a new 52-week high for the first time in nearly two years. Taken by itself a nine-day losing streak might sound worrisome, but when you factor in the other positives, getting overly bearish here might not be very prudent. For more on our thoughts on corporate America and earnings, be sure to read Earnings Update: End Of A Long Drought.

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Past performance is no guarantee of future results.

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.

The economic forecasts set forth in the presentation may not develop as predicted.

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There is no guarantee that a diversified portfolio will enhance overall returns or outperform a nondiversified portfolio. Diversification does not ensure against market risk.

The Standard & Poor’s 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.

*Any data prior to March 4, 1957 is back-tested, as published by the index’s parent company, S&P DOW Jones Indices. All information for an index prior to its Launch Date is back-tested, based on the methodology that was in effect on the Launch Date. Back-tested performance, which is hypothetical and not actual performance, is subject to inherent limitations because it reflects application of an Index methodology and selection of index constituents in hindsight. No theoretical approach can take into account all of the factors in the markets in general and the impact of decisions that might have been made during the actual operation of an index. Actual returns may differ from, and be lower than, back-tested returns.

This research material has been prepared by LPL Financial LLC.

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