S&P Win Streak Stats Bode Well for Bulls

Sizing up the winningest stocks and indexes on Wall Street

Senior Quantitative Analyst
Oct 3, 2018 at 7:00 AM
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With the third quarter coming to an end last week, there are a few winning streaks I want to highlight. One is well-known and getting some press and a couple others are less well-known. As I often do, I’ll examine prior instances of similar streaks to see how the indexes tended to behave going forward.

S&P 500 Six-Month Win Streak

This streak is getting a lot of attention. The S&P 500 Index (SPX) has been positive for six months in a row. Historically, the index has consistently outperformed after these winning streaks.

Three months after the streaks, the S&P 500 averages a gain of just over 3% with a little more than 80% of the returns positive. A year after six-month winning streaks, the S&P 500 averages a gain of more than 12%, with over 85% of the returns positive. By comparison, the typical 12-month return for the index has been 8.88% with about 74% of the returns being positive.

The last six-month winning streak was exactly a year ago, at the end of September 2017. That streak went on another four months, finally ending at 10 this last February.

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It gets better. During the latest six-month winning streak, the S&P 500 gained just over 10% -- not a lot compared to the average gain of about 20% during the other streaks. But in the table below, I break down the one-year returns going forward by how much the index gained during the winning streak. In the seven times that the index gained less than 15% during the streak, the S&P 500 was positive 100% of the time over the following year, averaging a gain of more than 16%.

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Nasdaq Nine-Quarter Win Streak

This streak is arguably more impressive, but not getting as much attention. The tech-heavy Nasdaq Composite (IXIC) has been positive for nine straight quarters now. We have data for the index going back to 1971, and it’s only the second time we’ve seen a streak go on for nine quarters. The last negative quarter for the index was the second quarter of 2016, when the Nasdaq lost less than 1%.

As you can see from the table below, the last nine-quarter win streak for the Nasdaq occurred in March 2015. The streak ultimately reached 10 quarters before ending. After the ninth positive quarter, the index struggled over the next year, losing a small amount. It rebounded, however, so that the two-year return was a respectable 20%.

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Which Stocks Stack Up to S&P SmallCap 600?

I haven’t seen this noted anywhere, but the S&P SmallCap 600 Index (SPCY) has been positive for 12 straight quarters. It hasn’t experienced a losing quarter in three years. We have data on this index since 1995 and, as I expected, this is the longest streak on record. The next longest streak lasted eight quarters, from the third quarter of 2012 to the second quarter of 2014.

The large-cap S&P 500 and the S&P MidCap 400 Index (MID) were both lower in the first quarter of this year. Otherwise, those indexes would also have a 12-quarter win streak.

I decided to see which individual stocks also had formidable quarterly winning streaks. No stock could beat the S&P 600 streak of 12 quarters, but NVDA has matched it. Below is a list of stocks with at least a nine-quarter winning streak going. I found it surprising that only one of those 16 stocks, MMSI, is in the S&P 600. The other stocks all come from the mid-cap and large-cap indexes.

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