The Russell 2000 (small caps index) has now extended its winning streak from 4 months in a row to 5 months in a row.
As we demonstrate repeatedly here at BullMarkets, “strength begets more strength”. The Russell 2000 going up 5 months in a row is a sign of stock market strength. When this happens, the Russell 2000 usually continues to go up in the next 3-12 months.
When the Russell goes up 5 months in a row, the S&P 500 has an even higher chance of going up in the next 3-12 months.
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As you can see, the stock market tends to go higher in the next 3-12 months after the Russell goes up 5 months in a row. But more importantly:
None of these historical cases happen during a bear market rally. Bear markets don’t see this kind of market strength (i.e. the Russell is up 5 months in a row). It’s also rare for the market to see this kind of strength in the runup to a “big correction”.
This kind of market strength is characteristic of bull markets. That’s why the stock market has a strong tendency to go higher in the next 3-12 months: it’s still in a bull market.
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