As we highlighted yesterday, the Nasdaq is on pace for its best monthly return in three years (January 2012), but it also just had its 10th straight up day in a row. While this is only the second streak of ten or more up days during the current bull market, over the longer term these streaks have been a little more common. In the 44 years that the index has been around, there have now been 30 streaks of 10 or more up days in a row, or roughly once every year and a half.
The table below lists each of the prior 10+ day winning streaks for the Nasdaq since 1971. As we noted yesterday, while it may be tempting to say that the index is due for a breather, prior instances don’t necessarily bear that out. Just like in roulette, just because red hasn’t come up in several spins, it doesn’t mean it will be more likely to come up on the next spin. In the 29 prior ten day winning streaks since 1971, the Nasdaq averaged a gain of 0.15% (median: +0.21%) on day 11 with positive returns 69% of the time. For the sake of perspective, the average one day change of the Nasdaq on all days since 1990 is a gain of 0.05% with positive returns 55% of the time. Looking out over the next week, the index has averaged a gain of 0.56% (median: 0.43%) with positive returns 72.4% of the time. Finally, over the next month the Nasdaq has averaged a gain of 2.79% (median: 2.43%) with positive returns 82.8% of the time. As shown at the bottom of the chart, the average next day, next week, and next month returns are all better than the average one day, one week, and one month returns for all periods since 1971.