Why the S&P 500 Monthly Win Streak Could Have Bulls Smiling

After gaining 19.4% last year, the S&P 500 is once again surging in 2018—up nearly 8.0%, with the Nasdaq 14.8% and Russell 2000 11.7% up even more as of 09/06/18. Could there be even more gains in store over the coming year? We think so.

With a 14-year high in manufacturing, consumer spending at its best pace in four years, contained inflation, and 20% earnings expected in 2018 and another 10% next year, the economy continues to be in very solid shape. Not to mention the S&P 500 recently broke out to new all-time highs for the first time in nearly seven months, which historically has been followed by stronger than average returns in the coming year.

One more thing: A little-followed event just took place that has a solid track record for indicating potentially continued equity strength.

“The S&P 500 just closed higher for the fifth consecutive month in August. Well, would you believe that the past 25 times that has happened, it was higher a year later 24 of those times?” explained Senior Market Strategist Ryan Detrick.

As our LPL Chart of the Day shows, a five-month win streak may be a great signal for continued strength. Take note that this time last year, the S&P 500 was up five months in a row and many were concerned it had gone “too far too fast.” Twelve months later, it had added another 17.4%.

One For the Bulls

For more on what the usually troublesome month of September could bring, and our thoughts on what the new communication sector could mean for investors, be sure to listen to our latest LPL Financial Market Signals podcast.


*Please note: The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of predecessor index, the S&P 90.

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