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

Jul 20, 2016 at 9:35 AM
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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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