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.

Click here to download the data in Excel.

Conclusion

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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By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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