The bears are under pressure to prove that they haven’t been wrong all the time in the market comeback after March Corona virus Crash. Stocks have risen nearly 50% since the March 23 low and recent US trading history Dow Jones industry average suggests that working for the skeptics may not be easier this month.
The Dow just had a huge week Number for surprise jobs on Fridayand topped its 200-day moving average for the first time since February Covid-19 sunk shares. Last week was also the first time since December last year that the Dow made positive gains for three weeks. Similar three-week Dow runs have been run 40 times in the past decade, and history shows that the short-term momentum of stocks continues frequently.
In the month after three-week Dow rallies, the US stock index posted an average gain of 0.89%, according to the hens fund information platform Kensho, and was positive in 67% of the cases. The S&P 500 index achieved an average return of 0.81% and was positive 70% of the time.
Over the past decade, three-week Dow rallies are likely to maintain rather than exhaust the momentum in the equity markets.
Many investors may be looking beyond summer – and are seeing the latest signs of one economic recovery faster than expected and V-shaped recovery – as a reason to be more positive on the market in the next 12 to 18 months.
For investors worried that stocks may lose steam in the short term, the history of recent yields in June is a cause for concern. Since 2000, both US stock indexes have had a negative average return in the first month of summer that, according to Kensho, has been positive less than half the time in June in the past two decades. The Dow’s average return in June was negative 1.03% (–1.03%), while the S&P 500 declined an average of 0.74% (–0.74%).
Futures trading on Monday indicated the potential for stocks to keep profits open.
The positive shift in the three-week Dow rally data could help to keep the market positive throughout the summer. After the weakness in June, US stocks tend to show positive but cautious returns in longer summer trading periods, including July and August, according to Kensho.
Since 2000, both Dow and S&P have achieved average returns that are positive in the two and three month summer periods that begin after Memorial Day. Both indices rose by an average of 0.53% from June to July. In the three-month period including August, the Dow achieved a modest average return of 0.23% and S&P an average return of 0.37%.
After three weeks of rallies in the DJIA, the Dow and S & P achieved higher average returns in one, two and three month periods than typical for summer.
Since 2010, after a three-week rally in the Dow, average returns on US stocks have been rising in the following months.