The U.S. stock market’s rally is accelerating. It used to grind higher slowly and incessantly. It is now surging.
On January 26, the S&P 500 gained >1% for the first time since September 11, 2017 (CLOSE vs CLOSE $). The S&P has gained 14% from September 11, 2017 – present.
This is by far the longest streak in which the S&P did not gain more than 1% during a rally (94 trading days).
Let’s look at what happens when the stock market’s rally accelerates. Here are the study’s parameters:
- The S&P closed higher than yesterday’s CLOSE by more than 1%, and….
- This is the first time in at least 63 trading days (3 months) in which the S&P closed higher by 1%, and…
- The S&P closed at a 1 year high (252 trading days).
Here are the historical cases:
- December 4, 1995
- October 14, 1993
- September 13, 1967
- April 29, 1954
Let’s look at each of these cases individually
December 4, 1995
October 14, 1993
September 13, 1967
April 29, 1954
The 1995 case is most similar to today. Like the S&P in 1995, the S&P today has soared for more than a year. Based on this study, a “small correction” will likely begin within the next 2-3 months.