The Dow Hasn't Done This in a Decade

The S&P 500 has gone just one calendar year without a three-week losing streak since 1995

by Andrea Kramer |

Published on Nov 21, 2017 at 1:52 PM
Updated on Nov 21, 2017 at 1:57 PM

The Dow Jones Industrial Average (DJIA) and S&P 500 Index (SPX) ended last week in the red, marking their first back-to-back weekly losses since August. What's more, the indexes haven't suffered a three-week losing streak since mid-2016 -- and it's not looking like another weekly loss is in the cards, with stocks at record highs. There have been just six calendar years in history where the Dow and S&P avoided three straight down weeks.

Meanwhile, the CBOE Volatility Index (VIX) -- or the stock market's "fear gauge" -- hasn't ended three straight weeks higher in over a year, on pace for its second-ever calendar year without a three-week win streak. Let's take a closer look at these rare technical feats for the DJIA, SPX, and VIX, and what they could mean for stocks heading into 2018.

Dow Hasn't Done This in a Decade

The DJIA hasn't suffered a three-week losing streak since May 2016 -- 78 weeks ago, according to Schaeffer's Senior Quantitative Analyst Rocky White. The last time the Dow went at least 78 straight weeks without three losses in a row was in 2007. Prior to that, you'd have to go back 20 years for a signal, to just before the 1987 stock market crash. The only other signal -- and the longest -- was in the mid-1950s, when the DJIA went 107 straight weeks without a three-week losing streak.

dow after 78 weeks wo 3 wkly losses

The last time the blue-chip index went a calendar year without a three-week losing streak was 2006. Prior to that, you'd have to go back to 1989 for a signal. The first signal was in 1909, which preceded a very rough year for the Dow, losing nearly 18% over the next 12 months.

dow years without 3 week losses

Following these years without three-week losing streaks, the Dow has outperformed at the six-month marker, up 6.66%, on average. That's compared to an anytime average six-month gain of 3.75%, since 1909. However, one year later, the DJIA was up just 0.1%, and was higher just half the time, compared to an average anytime return of 7.17% and a win rate of 65.4%.

dow after years without 3 wkly losses

Brexit Marked Last Time SPX Suffered 3 Down Weeks

The S&P has gone 73 weeks, since the Brexit brouhaha in June 2016, without a three-week losing streak -- the first time since the streak that ended in early 2014. The longest ever streak without three weekly losses in a row ended in 1996, at 107 weeks.

spx after 73 weeks wo 3wk loss

The last time the S&P 500 Index went a calendar year without a three-week losing streak was 2013 -- the only signal in the past 22 years. There have been just six of these years total, with the first in 1945.

SPX years wo 3 straight weekly losses

Following these years without three-week losing streaks, the SPX was higher than usual at the three- and six-month markers, averaging gains of 4.79% and 10.34%, respectively. In fact, the index was higher 100% of the time six months after every single calendar year without a three-week losing streak. That's compared to an average six-month gain of 4.38% since 1945, with a win rate under 70%.

spx after years w no 3wk losing streaks

VIX Has Done This Just Once

The VIX has now gone 57 weeks without three straight weekly gains, with the last one happening in October 2016, amid pre-election jitters. Only two other times has the VIX gone that long without a three-week winning streak: in the mid-1990s, and during its longest-ever stretch that ended in June 2011.

VIX 57 wks w no 3wk gains

There's been just one calendar year in history where the VIX didn't end higher three weeks in a row: in 2010. Three months into 2011, the fear gauge was down 1.97%, and sank 10.59% by the middle of the year. However, the index had surged 31.83% by the start of 2012.

VIX after years wo 3wk gains

2018 Could Start Strong for Stocks

As far as the Dow and SPX are concerned, if the indexes can make it through December without a three-week losing streak, it will be a rare feat indeed. And again, while the sample sizes are small across the board, it's worth noting that both the DJIA and S&P were notably higher than usual three and six months after these years, and the VIX was notably lower at these markers after the lone year without a three-week win streak. If history repeats, it could be a good first half of 2018 for the stock market.

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