What Happens After Dow 8-Day Winning Streaks?

The Dow has rallied for eight straight trading days, and if past is precedent, the index could continue to outperform

by Alex Eppstein

Published on Jul 20, 2016 at 9:35 AM

The Dow notched its eighth consecutive daily win yesterday -- its longest win streak since 2013. During this time frame, the blue-chip index has gained 3.7%, according to the chart below from Schaeffer's Senior Quantitative Analyst Rocky White (which looks at the last 10 comparable winning streaks). That's the best percentage return since 2009:

dow win streaks july 20

So, what happens after eight-day winning streaks? Based on the chart below, which goes all the way back to 1950, the Dow tends to outperform on both an average return and percent positive basis -- with the exception of next-day returns. For example, one week after an eight-day win streak, the Dow averages a gain of 0.4% and is positive 61% of the time, versus an anytime return of 0.2% and 56% positive. This trend is even more pronounced one month out, with the average return and percent positive jumping to a respective 1.4% (vs. 0.7%) and 70% (vs. 60%).

dow win streaks 2 july 20

In short, it seems like we can expect continued outperformance from the Dow, if history is any indicator. That said, the index has a long way to go to match its longest-ever winning streak. Back in January 1987, the Dow finished higher for 12 straight sessions, advancing nearly 11% during that time frame.

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