Study: Russell has gone up 7 weeks in a row. EXTREMELY bullish for stocks


Last week I published a study demonstrating what happens to the stock market when the Russell 2000 (small caps) index goes up 6 weeks in a row. The Russell has extended that streak to 7 weeks in a row.

Here’s what happens next to the S&P 500 when the Russell 2000 goes up 7 weeks in a row (for the first time in half a year).

Click here to download the data in Excel.
Notice how the U.S. stock market’s medium-long term returns are EXTREMELY BULLISH. The S&P goes every single time on a 6 month and 1 year forward basis. The median return in 1 year is 15.5%!
Here are the historical cases in detail.
October 14, 2013 and February 11, 2013
The stock market surged after the Russell 2000 went up 7 weeks in a row.

May 26, 2003
The stock market surged after the Russell 2000 went up 7 weeks in a row.

May 10, 1999
The stock market (S&P 500) rallied another 9 months after the Russell went up 7 weeks in a row.

September 9, 1996 and June 19, 1995 and September 5, 1994
The stock market soared after each time the Russell went up 7 weeks in a row.

November 23, 1992 and February 25, 1991
The stock market soared after each time the Russell went up 7 weeks in a row.

January 9, 1989
The S&P 500 rallied another 1.5 years before starting a “significant correction” (which the Medium-Long Term Model predicted).

Conclusion

This study suggests that the stock market has a very high probability of going higher over the next 6 months and 1 year.
The Russell going up 7 weeks in a row is a sign of extreme strength. Extreme strength only happens during bull markets – it doesn’t happen during bear markets (i.e. this isn’t a bear market rally).
Click here for more market studies.

2 comments add yours

  1. Do you see any connection between the two? Does the Russell is the factor that influence the sp500 to go up that way or is it a false alarm? I mean, are you trying to explain one by another using a not correlated relationship?
    Thanks

Leave a Comment