Lucky Number Seven

Seven has been a lucky number for U.S. stocks. The S&P 500 Index just notched its first seven-day winning streak since October 2017. As shown in the LPL Chart of the Day, this feat has occurred just seven other times in the current bull market.

For the most part, each winning streak preceded both short-term and long-term gains.

“Lucky number seven indeed,” explained LPL Senior Market Strategist Ryan Detrick. “Seven-day win streaks are indeed rare, but the good news is continued strength, especially longer term, is quite normal.”

A long winning streak is especially rare to start a quarter. The last time the S&P 500 kicked off a quarter with five straight days of gains was nearly 12 years ago, in the third quarter of 2007.

Short-term momentum and seasonal strength are working in bulls’ favor right now. The Dow Jones Industrial Average (Dow) has closed up in April for the last 13 years, while the S&P 500 has closed up in April for 12 out of the past 13 years, as we detailed in our blog April’s Bullish History.

However, higher stock prices may be tougher to achieve without a bout of volatility. U.S. stocks may need a breather after capping their strongest three-month gain since the 2009 lows, a rally that ranks in the 99th percentile of all three-month returns since 1950, according to Strategas. U.S. investors also have to contend with a weaker corporate outlook, recession worries, and global headwinds that could inhibit markets in the short term.

We believe the S&P 500 will eventually push higher through 2019 and maintain our fair value target of 3,000, but we think stocks could be ripe for some consolidation over the next few months.

IMPORTANT DISCLOSURES

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