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The market has only done this four times in 36 years, and it could be ‘very bullish’

Alex Rosenberg
The market has only done this four times in 36 years, and it could be ‘very bullish’

It's been a nice start to the week for stocks, to say the least. The S&P 500 rose by 0.61 percent on Tuesday, after jumping 1.08 percent on Monday.

What's even more notable than the size of the moves, however, is just how confident the market has appeared.

On Tuesday, the S&P never once dipped below its Monday high. Likewise, on Monday, it never traded below the highest level it hit on Friday.

These unflinching moves higher are rare. Going back to the beginning of 1981 (the last year for which FactSet offers continuous daily range data), the S&P has seen a low above the prior day's high in only 1.5 percent of sessions.

For it to happen two days in a row is truly anomalous. The S&P spent the entire day above the prior high for three-straight sessions in mid-February; before that, it saw two back-to-back such sessions in April. And that's it, at least in the past 36 years.

Such a move can be called "a window or a gap higher," Rich Ross, head of technical analysis at Evercore ISI, said Tuesday on CNBC's "Trading Nation." "Why is that so difficult? Because think about how big the S&P 500 is. That's a lot of market cap to really leap higher. This is like the 'Shark Week' video of the great white leaping out of the ocean."

"It's very bullish," Ross added. "It speaks to that element of surprise, and to the urgency of investors to get back into a trend that they perhaps had stepped out of."

Indeed, this week's gains come following two months in which stocks simple treaded water, as investors awaited the French election with bated breath. A decisive showing for right-winger Marine Le Pen would have made a potentially destabilizing French exit from the European Union more likely, but that event was averted, at least for now, to the apparent relief of investors around the globe.

At the same time, there appears to be something more than sentiment driving the move. On Monday, even as the S&P rose by more than 1 percent, it traded in a mere 0.3-point range. That's the smallest range seen on an up 1 percent-plus day in at least the past 36 years, according to a CNBC analysis of FactSet data.

The decisive-looking market moves, then, may just be yet another consequence of one of the biggest macro trends in market recently: the striking decline of volatility.

That is to say, it's easier for the S&P to avoid moving below its prior day's high when it moves around so little to begin with.

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