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3 Charts To Watch If You Are Bullish

3 Charts To Watch If You Are Bullish

September 02, 2020

The S&P 500 Index just closed the door on its best August since 1986, making new all-time highs along the way, while also closing up five months in a row.

First things first, make no mistake about it; this is a new bull market. That of course doesn’t mean it will last years like previous bull markets, but a nearly 57% gain in 5 months is what we’d classify as a bull market.

Here are all the bull markets going back to the Great Depression and where this one ranks.

 View enlarged chart.

Now let’s dig into the 5 month win streak. It is quite rare for stocks to gain from April through August, as the summer months tend to be somewhat tricky. Yet, we found there were six other years that saw these 5 months all close higher and the rest of the year was higher 4 times, with some solid returns in there. In fact, the only year that was lower the rest of the year was 2018, mainly due to the Fed policy mistake in December 2018.

View enlarged chart.

“What might surprise many investors is 5 month win streaks are actually incredibly bullish going forward,” explained LPL Financial Chief Market Strategist Ryan Detrick. “In fact, a year after a 5 month win streak has seen the S&P 500 higher 25 of the past 26 times.”

As shown in the LPL Chart of the Day, the S&P 500 Index gained more than 35% during this 5 month win streak, the most ever. Yet, the future gains after 5 month win streaks is very impressive, higher 25 out of 26 times a year later. An object in motion tends to stay in motion and this sure seems to be the case here.

View enlarged chart.

For more of our investment insights on the record breaking August and what could be on tap in September, check out our latest LPL Market Signals podcast below.



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All index and market data from FactSet and MarketWatch.

This Research material was prepared by LPL Financial, LLC.

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