Research & Advice

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Perfect 10

The technology-heavy NASDAQ stock market index closed out last week with a perfect 10 weeks in a row of gains. The last time that happened was 1999, during the peak of the Technology Bubble. Since the index’s 1971 inception, this was only the ninth such streak. That’s a long winning stretch for the market to run without interruption and you might think it is due for a breather. However, of the eight prior streaks, six of them went to 11 or more weeks. I know—one more week is hardly something to write home about, as my mom is fond of saying.

I usually am warning you about the madness of crowds at extremes, and how an overly optimistic market is a risky market. But from a historical standpoint, we may not be there yet. Of those eight prior perfect 10-week streaks, the average returns for the NASDAQ were 1.07 and 2.23 percent, one week and one month later respectively. Even more impressive is that three months later, the index was up an average of 10.09 percent. However, a year later, after some price drops, it was up only an average of 4.38 percent. So too much of a good thing can be bad for you.

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