« Here Come the Bulls! | Main | Dow and S&P 500 Correlation »
Wednesday
Mar132013

DJIA 9+ Day Winning Streaks

The Dow Jones Industrial Average (DJIA) has now finished in the green for nine consecutive trading days.  With a gain of 2.85% over that period, the current streak has been the weakest in terms of percentage gain in nearly 50 years (March 1964). The table below lists the 25 streaks of nine or more up days in a row for the DJIA in the post WWII period.  For each period, we show how the index performed over the first nine days (if longer than nine days) and also show how the index performed over the following week, month, and three months (from the ninth day).  

While a lot of investors are looking for a pullback in the market from overbought levels, just because the DJIA has risen for nine straight days does not necessarily mean that the index is going to see an imminent pullback.  Of the 24 prior nine day winning streaks since 1945, eleven have gone on to at least a tenth day.  Over the following week, the average change over those 24 periods was a gain of 0.5% with positive returns 64% of the time.  Over the following month, the DJIA averaged a gain of just 0.4% with positive returns 52% of the time.  Finally, looking out three months, the DJIA's average return increases to 2.5% with positive returns 68% of the time.  Of those 24 prior streaks, the maximum three month decline was 5.6% in 1948, while three different periods saw double-digit gains over the next three months.

Subscribe to Bespoke Premium today to view our renowned B.I.G. Tips reports on a daily basis.