What a 12-Day Win Streak Means for The Dow, Historically

The long-term results after these streaks have tended to be positive

Senior Quantitative Analyst
Jul 26, 2023 at 8:00 AM
facebook X logo linkedin


For just the third time since 1950, the Dow Jones Industrial Average (DJI) is on a 12-day winning streak. The last such streak was over six years ago, in February of 2017. This week I’m looking at how the index has tended to perform after both winning streaks and losing streaks. Let’s see if there’s a popular point at which buyers or sellers seem to step in.

Next Day Returns

From 1950, this chart shows the average next day return after winning and losing streaks for the Dow reach certain levels. If the Dow has an up day after a down day (a 1-day winning streak) then the index averages close to a 0.1% return the next day. If it’s a down day after an up day, then it averages a slight loss the next day. As the winning streak moves forward, the next day average return moves lower and lower, except a pop after a seven-day winning streak for an unknown reason. Currently, we’re at that eight+ days winning streak at which the next day return is barely above breakeven.

As far as losing streaks go, buyers have tended to step in after five straight days of losses. The average next-day return goes from a slight loss to a decent average return of close to 0.1%. Buyers get even more antsy after six straight days of losses with the Dow averaging a return of over 0.25% the next day. The longer the losing streak, the better the Dow tends to do the following day.

iotw1jul25

This next chart is like the one above except it shows the percentage of positive days after winning and losing streaks. It’s interesting that the streak seems to get exhausted after six days whether it’s a winning streak or a losing streak. After six straight losses, the Dow was positive 60% of the time the next day, the highest on the chart. After a six-day losing streak, the Dow was positive less than half the time (48%), the lowest percentage on the chart. After the streaks get to eight or more, there has been about a 50% chance of a positive next-day move, whether it was a winning streak or losing streak.

iotw2jul25

This next chart shows, for the corresponding winning and losing streak, the average return for the Dow when it was positive. As winning streaks get longer, you can expect less upside the day following. As losing streaks get longer, the buying pressure builds, and you can expect bigger moves higher.

iotw3jul25

And this chart below shows the average return for down days for the different streaks. As winning streaks get longer, down days tend to be less extreme. Based on the chart above and this chart, as losing streaks get longer, you can expect more extreme market moves whether it’s up or down. After long winning streaks, like now, you can expect less significant moves.

iotw4jul25

Finally, this table lists the only 12-day winning streaks for the Dow going back to 1950. The streak reached 13 days one time out of three but a week after the streak, it was positive all three times. The longer term returns after these streaks were very good, as the index averaged 6.3% over the next three months and 11.6% over the next six months while being positive all three times.

iotw5jul25

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI