What Happens After An Eight Day Win Streak Ends
So far, this week there have been three positive and one negative day of action. The winning streak on the S&P 500 ended on Tuesday after 8 up days in a row. The S&P 500 fell -0.59%. It is one of the longest winning streaks in recent memory.
The bad news is that the streak ended but the good news is that there is more upside ahead at least over the next three months. In tracking the last six years of trading, we find that there have been 12 winning streaks on the S&P 500 that lasted at least six days with the maximum being eight days. There was only one drawdown that happened in January of 2018. Three months later the loss was -4.17%.
Remember the drop in January and February of 2018 was one of the worst on record and it took until May to resolve.
The average gain after the winning streak was 3.85% with the biggest gain 10.01%. Other strong gains included moves of 8.32%, 7.36% and 6.48%. So three months from now will take us into July.
Tuesday the S&P 500, Dow Jones Industrial Average and Russell 2000 were lower and moved back below their respective 5 day moving averages. The Russell has again failed its 200 day moving average.
If other moving averages were breached like the 10, 20 and 50 then we would get more concerned about the recent run. But with the action on Wednesday, Thursday and Friday all is good in the world again.