Study: Russell is up 5 months in a row. Very bullish for stocks


The Russell 2000 (small caps index) has now extended its winning streak from 4 months in a row to 5 months in a row.

As we demonstrate repeatedly here at BullMarkets, “strength begets more strength”. The Russell 2000 going up 5 months in a row is a sign of stock market strength. When this happens, the Russell 2000 usually continues to go up in the next 3-12 months.

When the Russell goes up 5 months in a row, the S&P 500 has an even higher chance of going up in the next 3-12 months.

Click here to download the data in Excel.

Conclusion

As you can see, the stock market tends to go higher in the next 3-12 months after the Russell goes up 5 months in a row. But more importantly:
None of these historical cases happen during a bear market rally. Bear markets don’t see this kind of market strength (i.e. the Russell is up 5 months in a row). It’s also rare for the market to see this kind of strength in the runup to a “big correction”.
This kind of market strength is characteristic of bull markets. That’s why the stock market has a strong tendency to go higher in the next 3-12 months: it’s still in a bull market.
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2 comments add yours

  1. Hi Troy,
    Thank you for the amazing job (as always).
    Don’t you think you should be ignoring (for these kinds of studies) periods in which the economy is in the begining/middle of a cylce?
    I understand it lowers considerably the sample size, but it probably would be more apropriate.
    Thank you in advance,
    JF.

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