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“You can’t be brave if you’ve only had wonderful things happen to you.” – Mary Tyler Moore

Morning stock market summary

Below is a snippet of commentary from today’s Morning Lineup.  Start a two-week trial to Bespoke Premium to view the full report.  

Anyone long the stock market (even small caps after the last two months) will be sad to see this year come to an end, but time moves on, and so do investors.  The year ended on a positive note in Asia and Europe, but here in the US equity futures are looking more subdued.  The only report on the calendar today is the Chicago PMI report for December. You may recall that last month’s report was much better than expected coming in at a level of 55.8 versus forecasts for a reading of 46.0, ending what had been an extended streak of readings below 50. This month, economists are forecasting a level of 50.0 on the nose, but if the reading can top that level it will help lend some credence to the idea that the manufacturing sector is exiting its multi-month slump.

After a rough late summer/early fall stretch, investors have had nothing but wonderful things happen to them over the last two months. At the rate this week is going, both the S&P 500 and the Nasdaq are on pace to close higher for the 9th straight week.  There’s still a day left of trading, and we don’t want to jinx it, therefore, the bar for this week in the chart below is colored in light red. Since the Nasdaq’s inception in 1971, there has only been one other period where both indices had concurrent streaks of nine straight gains,  and that was in late 1985 when a streak of gains lasted eleven weeks.

Looking at each index individually, returns following nine consecutive weeks of gains have generally been better than average.

For the S&P 500, there have been nine prior nine-week winning streaks since 1952 (when the five-day trading week in its current form began), and while performance over the next week was negative on a median basis, and performance was down more often than it was up, median returns for the next one, three, six, and twelve months were better than the long-term average for all periods since 1952.

While the Nasdaq has only been around since 1971, it has had more nine-week winning streaks than the S&P 500, and of the fourteen prior streaks, ten extended to ten weeks.  Looking ahead, median returns over the following one, three, and twelve months were positive and better than the long-term average, but six months later, the median gain of 3.67% was well below the 6.02% average for all six-month periods since 1971.

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