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What This Rare Nasdaq Signal Could Mean for Stocks

Karee Venema

It's been an impressive year-end rally for the U.S. stock market, with all three major market indexes carving out record highs during the Christmas week, and the S&P 500 Index (SPX) logging its fifth straight weekly gain. Additionally, the Nasdaq Composite (IXIC) muscled its way to an 11th consecutive win on Thursday, marking its longest winning streak since July 2009, when the tech-heavy index made it 12 in a row.

Such lengthy win streaks are rare for the Nasdaq. Data from Schaeffer's Senior Quantitative Analyst Rocky White shows the index has strung together daily winning streaks lasting 11 days or longer just 20 other times since 1971, the longest lasting 19 days back in June 1979. The largest gains from a prolonged period of positive price action came in early 1992, when the IXIC gained 16% during a 13-day win streak.

nasdaq after win streaks

Historically speaking, the Nasdaq tends to keep the positive momentum going, at least in the short term. Following the end of those previous 20 streaks, the index outperformed its anytime returns across the one-week, two-weeks, one-month, and three-month returns. Notably, at the one-month mark, IXIC averaged a post-win streak return of 3%, with 85% of the returns positive, compared to an average anytime one-month return of 1%, with a 61% win rate.

nasdaq returns after win streak ends