Monday, March 18, 2013

The Dow's Streak

Last Friday was a mildly disappointing day for the stock markets. The Dow Jones industrial average closed lower for the first time in ten trading days. But now that the ten-day winning streak has ended, it's worth looking back on what a remarkable feat that was.

It's not just that this was the Dow's first ten-day winning streak since 1996; we haven't even had a nine-day winning streak since then. Since World War II, there have been just eleven other ten-day Dow winning streaks, according to figures compiled by the Bespoke Investment Group.

But all that's over with now. The question is: Does the winning streak signal anything about the future? The data is promising in that area. After those nine- and ten-day streaks, the Dow has risen by an average of 2.5 percent over the next three months, and 68 percent of those three-month periods were positive.

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