The Stock Market Just Did Something for the 9th Time Since 1957. History Says It Signals a Big Move in the S&P 500 Within the Next Year.

The S&P 500 recently closed above its 20-day moving average for 68 consecutive days, marking only the ninth such streak exceeding 60 days since 1957. Historically, these extended periods have seen the S&P 500 rise an average of 11% in the subsequent 12 months, occurring in seven out of eight prior instances. While this historical precedent suggests potential continued gains, the article cautions that ongoing factors like tariffs and persistent inflation could still introduce volatility and temper future returns, emphasizing that past performance is not indicative of future results.

Analysis

The S&P 500 has demonstrated significant short-term momentum by closing above its 20-day moving average for 68 consecutive days, a technical event that has occurred only nine times for streaks of 60 days or more since 1957. Historical data following the eight previous occurrences is compelling, showing the index rose in seven instances over the subsequent 12 months, delivering an average gain of 11%. This performance notably exceeds the benchmark's long-term average annual return of 8%. This signal emerges amidst a volatile year characterized by a 19% market decline followed by a strong 29% rebound over the past four months. However, the analysis is not unequivocally bullish, as the article explicitly identifies unresolved tariff negotiations and persistent inflation as key macroeconomic risks that could stymie the rally and invalidate the historical precedent. While the technical data suggests a favorable outlook, these external factors introduce a material degree of uncertainty.

Key Decisions for Investors

• The strong historical precedent, with an 11% average gain in the 12 months following similar streaks, provides a data point supporting a continued bullish or overweight stance on broad market equity exposure.
• Investors should closely monitor leading indicators for inflation and any news regarding trade policy, as these are identified as the primary catalysts that could disrupt the positive technical signal.
• Despite the bullish long-term indicator, expect continued market volatility, as noted in the article, and consider that historical performance does not preclude significant drawdowns on the path to potential future gains.